MAR 3023 Ch 10

Demand curve

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

Price elasticity

A measure of the sensitivity of demand to changes in price

Cost based pricing is based on what?

Although costs are an important consideration in setting prices, cost-based pricing is often product driven.

First step in value-based pricing

Assessing customer needs and value perceptions is the first step in the process.

Value-added pricing

Attaching value-added features and services to differentiate a company's offers and support higher prices.

Cost-based pricing fourth step

Convincing buyers of a product's value is the fourth step in cost-based pricing.

Cost base pricing first step

Designing a good product cost-based pricing is the first step

The fourth step in value-based pricing

Designing products to deliver the desired value at the target price is the fourth step.

Cost-based pricing second step

Determining product costs is the second step.

Third step value-based pricing

Determining the costs that can be incurred is the third step.

Break even volume equation

Fixed cost divided by price minus variable cost. This equation gives the number of units that must be sold to break even.

Good-value pricing

Offering just the right combination of quality and good service at a fair price.

Target costing

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

Second step in value-based pricing

Setting a target price to match customer perceived value is the second step.

Customer value-based pricing

Setting prices based on a buyer's perceptions of value rather than on the seller's cost.

Customer-value based pricing

Setting pricesbased on a buyer's perceptions of value rather than on the seller's cost.

Cost-based pricing third step

Setting the price based on cost is the third step in cost-based pricing.

Price

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.

How does the company work cost based pricing

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.

Total costs

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