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PRICING & COSTING
| Question | Answer |
|---|---|
| One of the company’s core financial statements that shows their profit and loss over a period of time | Income Statement |
| The profit or loss is determined by taking all revenues and subtracting all expenses from both operating and nonoperating activities | Income Statement |
| The language of business | Accounting |
| Process of recording financial transaction pertaining to a business | Accounting |
| Includes summarizing, analyzing, and the reporting these transactions to oversight agencies, regulators, and tax collection entities. | Accounting |
| Formal records of the financial activities and position | Financial Statement |
| Relevant financial information is presented in a structured manner, in which is easy to understand | Financial Statement |
| The overview of the assets, liability, and owner's equity as a snap shot in time. | Balance Sheet |
| How well a company's generate cash to pay its debt obligation once its operating expenses as well as the fund expenses. | Statement of Cash Flows |
| Financial statement that shows you the company’s income and expenditures | Income Statement |
| Important/relevant details for the transaction | Disclosure |
| It is what you pay for services or good you acquired | Price |
| It is the number of inputs that incur in producing the product of the firm | Cost |
| They track how much it cost to produce a good or service. | Cost of Sales/Cost of Good Sold |
| The largest expense that a business incurs | Cost of Sales/Cost of Good Sold |
| Expense that incurred by a business to sell its output | Cost of Sales/Cost of Good Sold |
| Rent, tuition, fee, fare, utilities, interest | Price |
| It is important because its the primary motivation to make a profit. | Price |
| It is the process of assigning a selling price to a good or service | Price |
| Expressed either in monetary of non-monetary terms in exchange for a service or product | Price |
| Oldest form of commerce-the exchange of goods and services between two or more parties without the use if money. | Barter system (Bartering) |
| Price is revenue | Seller |
| Price is the cost of something | Consumer |
| It allocates resources in a free market economy | Price |
| Remain the same regardless of sales | Fixed cost |
| Change based on your sales activity | Variable cost |
| Price of your products helps create your image in the minds of customers; If prices is too low, customers might think of your product as inferior;If too high, the price might scare customers away | Consumer perception |
| It can affect pricing when the target market is price conscious because competitors’ pricing may determine your pricing | Competition |
| When companies set the prices of a product instead of market forces; Pricing above the marker when no other retailer is available | Price fixing |
| An illegal practice in which companies restrict prices within a specified range | Price Gouging |
| price fixing imposed by a manufacturer on wholesale or retail resellers of its products to deter price-based competition (illegal) | Resale price maintenance |
| the pricing of goods based on cost per unit of measure, such as a pound or an ounce, in addition to the price per item | Unit pricing |
| deceptive method of selling in which a customer, attracted to a store by a sale priced item, is told either that the advertised item is unavailable or that it is inferior to a higher-priced item that is available. | Bait and switch |
| It is based on the cost of ingredients & operating expense of the business. | Cost based pricing |
| Based on how much customers will pay for your product; Luxury (perception to spend) | Value based pricing |
| Useful when the product is homogenous, and market is highly competitive. Companies try to maintain the price of its products more or less at par with competition price. | Competition based pricing |
| Helps to control costs, make decisions and plan for the future. | Importance of knowing your cost |
| helps to set the appropriate prices so that the business makes a profit | Importance of knowing your cost |
| It is the money your business spends to make and sell your goods or services. | Cost |
| It is anything that contributes to the expense of the product or service provided by a business | Cost |
| The costs associated with your business's product that must be paid regardless of how much you sell. (RENT, PAYROLL, EQUIP DEPRE) | Fixed Costs |
| The costs directly related to the sales volume of your business. (DELIVERY, SALES COMMISSION, ADVERTISING) | Variable Costs |
| The amount of the product selling price over and above the variable cost per unit | Unit Contribution Margin |
| the calculation of all of the costs that go into making and selling a good or providing a service | Costing |
| The making of gain in business activity for the benefit of the owners of the business | Profit |
| The total amount of money that firm receives from sales of its product or other sources. | Total Revenue |
| The cost of all factors of production | Total Cost |
| Profit is the return for taking a risk | True |
| Profit measures the success of an investment | True |
| Profit is an important source of finance | True |
| It is a strategic challenge with a direct impact on profitability. | Pricing on profitability |
| It requires a breadth of information and the right perspective, as well as the ability to balance competing agendas. | Pricing on profitability |
| It refers to the act of gathering information, conducting quantitative analysis, and revealing an accurate understanding of the range of prices likely to yield positive results | Science of Pricing |
| It demonstrates the impact of a small change in price on profits. | Profit Sensitivity Analysis |
| It is seen in linear relationship between profits and prices | Direct effect |
| It derives from the influence of price changes on customer demand | Indirect effect |
| It defines the required demand increase to justify a price cut and the allowable demand sacrifice to justify a price hike. | Volume hurdle |
| In strategic decisions to attack a specific market at a new price point, volume hurdles enable executives to quantify the required selling goals and compare them against their expectations of potential demand. | True |
| Good pricing starts with understanding of HOW customers’ perceptions of value affect the prices they are willing to pay Both customers & industrial buyers balance the price of a product against the benefit of owning it | True |
| Before setting the price of a product, the marketer must understand the relationship between price and demand for the company’s product | True |
| (Pricing in different types of markets) Many buyers and sellers who have little effect on the price | Pure Competition |
| (Pricing in different types of markets) Many buyers and sellers who trade over a range of prices | Monopolistic Competition |
| (Pricing in different types of markets) Few sellers who are sensitive to each other's pricing/marketing strategies | Oligopolistic Competition |
| (Pricing in different types of markets) Single Seller | Pure Monopoly |
| A curve that shows the number of units the market will buy in a given time period, at different prices that might be charged. | Demand curve |
| a graph of the quantity of products expected to be sold at various prices if other factors remain constant | Demand curve |
| A shift in the demand curve is when a determinant of demand other than price changes. | True |
| Factors that cause a demand curve to shift: | -Income of the buyers -Consumer trends -Expectations of future price -The price of related goods -The number of potential buyers |
| It is also termed as Price Elasticity of Demand | Price Sensitivity |
| It refers to the degree or extent to which the consumer's buying behavior varies with the change in the price of the product or service | Price Sensitivity |
| Product differentiation and its unique features, shades the consumer’s price sensitivity towards it. With the unique value products or services, the organization can win over its competitors. | Unique Value |
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