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MP Pricing Terms
| Term | Definition |
|---|---|
| Price | the value in money placed on a good or service. Also considered a major factor in the success or failure of a business |
| value | the anticipated satisfaction consumers place on a product |
| demand elasticity | when the demand for a product is affected by its price |
| price fixing | occurs when competitor's agree on a certain price or range to sell their products |
| price discrimination | occurs when a firm charges different prices to similar customers in similar situations |
| loss leader | an item priced at or below cost to draw customers into the store |
| markup | when resellers add a dollar amount or percentage to the cost of a product in order to arrive at a price |
| markdown | the amount of a price reduction expressed in dollars or a percentage |
| price lining | a special pricing technique that sets a limited number (low, medium, or high) of prices for groups or lines of products such as 10, 15, or 20. |
| penetration pricing | when prices are set very low for a new product in order to encourage as many people as possible to buy the product and to keep unit costs low |
| price skimming | sets a very high price for a new product to recover costs as quickly as possible |
| prestige pricing | setting higher than average prices in order to suggest exclusiveness, status and quality |
| psychological pricing | pricing techniques that help create an illusion for customers about the value of a product. |
| promotional pricing | Offers lower prices for a limited period to generate sales. Most temporary pricing strategy |
| bundle pricing | A pricing technique in which a company offers several products in a package that is sold at a single price. |
| odd/even pricing | setting prices that all end in either all even or odd numbers. Ex $1.99 seems lower than $2.00 |
| cost plus pricing | pricing an item by adding the cost of making the product to a profit amount desired by the company |
| multiple unit pricing | offering multiple products (the same) for one price such as 3 for a dollar |
| inelastic demand | means that the demand for a product will not change even if the price does - Examples might be: diapers, milk, bread, gasoline. etc. |
| everyday low pricing | a type of psychological pricing strategy that signals to customers that the prices are always the lowest. |
| Special Event Pricing | pricing items at a discount for a shot period of time usually related to a holiday or season |
Created by:
janice ritchey
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