a dollar amount added to the cost of products to get the selling price.
means the percentage of selling price that is added to the cost to get the selling price.
the sequence of markups firms use at different levels in a channel-determines the price structure in the whole channel.
the number of times the average inventory is sold in a year.
Average cost pricing
means adding a reasonable markup to the average cost of a product.
Total fixed cost
is the sum of those costs that are fixed in total-no matter how much is produced.
Total variable cost
is the sum of those changing expenses that are closely related to output.
is the sum of total fixed and total variable costs.
Average cost (per unit)
is obtained by dividing total cost by the related quantity (that is, the total quantity that causes the total cost).
Average fixed cost (per unit)
is obtained by dividing total fixed cost by the related quantity.
Average variable cost (per unit)
is obtained by dividing total variable cost by the related quantity.
evaluates whether the firm will be able to break even- that is, cover all its costs-with a particular price.
Break-even point (BEP)
the quantity where the firm’s total cost will just equal its total revenue.
Fixed cost (FC) contribution per unit
the assumed selling price per unit minus the variable cost per unit.
focuses on the changes in total revenue and total cost from selling one more unit to find the most profitable price and quantity.
Value in using pricing
which means setting prices that will capture some of what customers will save by substituting the firm’s product for the one currently being used.
the price they expect to pay.
means setting some very low prices-real bargains- to get customers into retail stores.
is setting some very low prices to attract customers but trying to sell more expensive models or brands once the customer is in the store.
means setting prices that have special appeal to target customers.
is setting prices that end in certain numbers.
is setting a few price levels for a product line and then making all items at these prices.
is setting an acceptable final consumer price and working backward to what a producer can charge. Prestige pricing: is setting a rather high price to suggest high quality or high status.
is setting prices for a whole line of products.
Complementary product pricing
is setting prices on several products as a group.
setting one price for a set of products.
means offering a more specific price for each possible job rather than setting a price that appeals for all customers.
a price set based on bargaining between the buyer and seller.