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# MKTG 305

### Chapter 13 - Building the Price Foundation

TermDefinition
Average Revenue (AR) the average amount of money received for selling one unit of a product, or simply the price of that unit
Barter the practice of exchanging products and services for other products and services rather than for money
Break-Even Analysis a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output
Break-Even Chart a graphic presentation of the break-even analysis that shows when total revenue and total cost intersect to identify profit or loss for a given quantity sold
Break-Even Point (BEP) the quantity at which total revenue and total cost are equal
Demand Curve a graph relating the quantity sold and price, which shows the maximum number of units that will be sold at a given price
Demand Factors factors that determine consumers' willingness and ability to pay for products and services
Fixed Cost (FC) the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold
Marginal Analysis a continuing, concise trade-off of incremental costs against incremental revenues
Marginal Cost (MC) the change in total cost that results from producing and marketing one additional unit of a product
Marginal Revenue (MR) the change in total revenue that results from producing and marketing one additional unit of a product
Price (P) the money or other considerations (including other products and services) exchanged for the ownership or use of a product or service
Price Elasticity of Demand the percentage change in quantity demanded relative to a percentage change in price
Pricing Constraints factors that limit the range of prices a firm may set
Pricing Objectives specifying the role of price in an organization's marketing and strategic plans
Profit Equation Profit = Total Revenue - Total Cost; or Profit = (Unit price X Quantity sold) + (Fixed cost + Variable cost)
Total Cost (TC) the total expense incurred by a firm in producing and marketing a product; total cost is the sum of fixed cost and variable cost
Total Revenue (TR) the total money received from the sale of a product
Unit Variable Cost (UVC) variable cost expressed on a per unit basis for a product
Value the ratio of perceived benefits to price; or Value = (Perceived benefits / Price)
Value-Pricing the practice of simultaneously increasing product and service benefits while maintaining or decreasing price
Variable Cost (VC) the sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold
Created by: Danielle0051 on 2013-11-16