Objective 5.02 Study Guide
Factors ______Price
- Costs and ______
◦______- Business costs that are not ______by changes in sales ______Examples: rent, utilities, ______premiums
◦variable - ______costs that change ______to changes in sales volume. ______: cost of goods or ______, sales commission, ______charges, advertising
- ______and Demand
◦Supply -the amount of ______or services that producers are ______to provide. When there is a low ______and supply is high you need to ______your prices lower.
◦demand-the ______of goods or services that ______are willing and able to buy at ______prices. When the demand for your ______is high and supply is low, you can ______a high price.
- ______Perception
◦Different ______markets have different ______and opinions about prices.
- Competition – the______among businesses for ______dollars
- Government ______
◦______gouging – pricing above the ______when no other retailer is available
◦price ______– an illegal practice in which competing ______agree, formally or informally, to ______prices within a specified range
◦resale ______maintenance – price fixing ______by a manufacturer on ______or retail resellers of its ______to deter price-based ______
◦unit ______– the pricing of goods on the ______of cost per unit of ______, such as a pound or an ounce, in ______to the pice ______item
◦bait-and-______– a descriptive and ______method of selling in which a ______, attracted to a store y an ______sale, is told either that the advertised ______is unavailable or is inferior to a higher-priced item that is ______
- ______trends – Using the internet can ______customers with easy access to prices, products ______, and services and ______to technological changes can give a business a ______edge.
______Objectives
- Obtaining a target______on investment
◦return on ______(ROI) – the amount earned as a result of an ______
- ______market share – is a business's______of the total sales ______by all competing companies in a given ______
- other objectives – can include social and ______considerations, as well as meeting the ______prices and establishing an image
Pricing ______decisions
- Setting a basic ______setting
◦cost-______pricing – where you consider your ______costs and your profit objectives
◦______-based pricing – requires you to find out what ______are willing to pay for your product, then set the ______accordingly
◦______-based pricing – you need to find out what your ______charge, then decide what you should ______for your product
- ______policies – establishing a pricing ______frees you from making the same pricing______over and over
- ______life cycle pricing
◦Stage 1: ______– sales volume is______low marketing costs are high, and ______are low or even in the negative
▪______skimming – the practice of ______a high price on a new product or service in order to ______costs and maximize profits as quickly as possible; the price is then dropped when the ______or service is no longer unique
▪______pricing – a method used to build sales by ______a low initial price to keep unit costs to ______as low as possible
◦Stage 2: ______– sales climb rapidly, units costs are ______the product begins to show a profit, and______come into the market
◦Stage 3: ______– sales begin to slow and profits peak, but______fall of as competition increases
◦Stage 4: ______– sales and profits ______to fall
- ______techniques
◦______pricing – a pricing technique, most often used by retail businesses, that are based on the belief that customers' perceptions of a product are strongly influenced by price, odd/even pricing, price lining, promotional pricing, multiple-unit pricing, and bundle pricing
▪______pricing – a pricing technique in which higher-than-average prices are used to suggest status and prestige to the customer
▪odd/______pricing – a pricing technique to which odd-numbered prices are used to suggest bargains
▪price ______– a pricing technique in which items in a certain category are priced the same
▪______pricing – a pricing technique in which lower prices are offered for a limited period of time to stimulate sales
▪______unit pricing- a pricing technique in which items are priced in multiples
▪______pricing – a pricing technique in which several complementary products are sold at a single price, which is lower than the price would be if each item was purchased separately
- Discount pricing
◦______pricing – a pricing ______that offers customers ______from the regular price; some reductions are basic ______-off discounts and others are ______discounts
______and Revising Prices
- Break-Even ______– The level of sales at which ______equal total costs - (Fixed Costs) / (unit selling price – variable costs)= Number of units needed to break-even
◦______price – the actual or projected price per unit
- ______-the amount added to the cost of an ______to cover ______and ensure a profit (cost + markup = price; price – markup = cost; price – cost = markup)
- ______– the amount of money taken off an original price (price * markdown ______= $ markdown; price – markdown = sales price)
- ______– a pricing technique that offers ______reductions from the regular price; some reductions are basic ______off discounts and others are specialized discounts (price * discount percentage = discount dollars; price – ______dollars = discounted price)
- Possible ______to pricing strategy
◦Adjusting prices to ______profit – profit or loss is determined by the ______between your______price and your costs. Before doing either 2 ______to ask:
▪Are your products' pries ______or inelastic?
▪What are your ______price?
◦Reacting to ______prices – you must keep your eye on ______market prices for your products
◦Revising______of sale – you can change your credit ______or introduce trade, quantity, or cash discounts
- ______limit – the maximum amount a ______may allow a customer to change without getting special authorization
- ______of demand – The degree to which demand for a good or ______varies with its price.
- ______ceiling – The maximum price a seller is ______to charge for a product or service.