MARK 3336 CH 10

Value-added pricing

-is attaching specific features and services to differentiate a company's. -is attaching value-added features and services to differentiate a company's offers and support higher prices. -Value-added pricing attaches value-added features and services to differentiate a company's offers and support higher prices.

Good-value pricing

-is offering just the right combination of quality and good service at a fair price. -Good-value pricing offers just the right combination of quality and good service at a fair price.

Price is best defined as the ________________. It is also the sum of the values that customers exchange for the benefits of having or using the product or service.

amount of money charged for a product or service. Price is best defined as the amount of money charged for a product or service. It is also the sum of the values that customers exchange for the benefits of having or using the product or service.

Fixed costs

are costs that do not vary with production or sales level.

Variable costs

are costs that vary directly with the level of production.

Target costing

is pricing that starts with an ideal selling price, then targets costs that will ensure that the price is met.

Demand Curve

is a curve that shows the number of units the market will buy in a given time period, at different prices that might be changed.

Customer-value based pricing

is setting price based on a buyer's perceptions of value rather than on the seller's cost. -Customer-value based pricing sets price based on a buyer's perceptions of value rather than on the seller's cost.

Cost-based pricing

is setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk.

Price

is the amount of money charged for a product or service, or the sum of the values that customers exchange for the benefits of having or using the product or service.

Experience curve

is the drop in the average per-unit product cost that comes with accumulated production experience.

Price elasticity

is a measure of the sensitivity of demand to changes in price.

Total costs

are the sum of the fixed and variable costs for any given level of production.

In Value-Based pricing-----

The First Step: Assessing customer needs and value perceptions The Second Step: Setting a target price to match customer perceived value The Third Step: Determining the costs that can be incurred The Fourth Step: Designing products to deliver the desired value at the target price

In Cost-Based Pricing-----

The First Step: Designing a good product The Second Step: Determining product costs The Third Step: Setting the price based on cost Although costs are an important consideration in setting prices, cost-based pricing is often product driven. The company designs what it considers to be a good product, adds up the costs of making the product, and sets a price that covers costs plus a target profit. The Fourth Step: Convincing buyers of a product's value