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| the assignment of value, or the amount the consumer must exchange to receive the offering |
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| the value of something that is given up to obtain something else |
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| the costs of production (raw and processed materials, parts, and labor) that are tied to and vary depending on the number of units produced |
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costs of production that do not change with the number of units produced (rent) |
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the fixed cost per unit produced total fixed costs / units produced |
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| # of products x variable costs x fixed costs |
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| a method for determing the number of units that a firm must produce and sell at a given price to cover all its costs |
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the point at which the total revenue and total costs are equal and beyond which the company makes a profit; below that point, the firm will suffer a loss also known as equilibrium |
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| a method that uses cost and demand to identify the price that will maximize profits - examines the relationship between marginal cost and marginal revenue |
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| the increase in total cost that results from producing one additional unit of a product |
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| the increase in total income or revenue that results from selling one additional unit of a product |
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Marginal cost = marginal revenue MC = MR |
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| profit maximized when...... |
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| marketer figures all costs for the product and then adds desired profit per unit - most common cost-based approach |
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| price is calculated by adding a pre-determined percentage to the cost |
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| a price-setting method based on estimates of demand at different prices |
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| process in which firms identify the quality and functionality needed to satisfy customers and what price they are willing to pay before the product is designed; the product is manufactured only if the firm can control costs to meet the required price |
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| a practice of charging different prices to different customers in order to manage capacity while maximizing revenues |
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| value pricing, or everyday low pricing (EDLP) |
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| pricing strategy in which a firm sets prices that provide ultimate value to customers |
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a very high, premium price that a firm charges for its new, highly desirable products -intention of dropping the price based on market changes |
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| pricing a new product low for a limited period of time in order to lower the risk for a customer |
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| selling two or more goods or services as a single package for one price |
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| pricing tactic for two items that must be used together; one item is priced very low, and the firm makes its profit on another, high-margin item essential to operation of the first item |
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| pricing tactic in which the cost of transporting the product from the factory to the customer' slocation is the responsibility of the customer |
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| pricing tactic in which the cost of loading and transporting the product to the customer is included in the selling price and is paid by the manufacture |
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| a pricing tactic in which customers pay shipping charges from set basing-point locations, whether the goods are actually shipped from these points or not |
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| uniform delivered pricing |
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| pricing tactic in which a firm adds a standard shipping charge to the price for all customers regardless of location |
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| freight absorption pricing |
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| pricing tactic in which the seller absorbs the total cost of transportation |
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| internal reference prices |
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| customers have a set price or price range in their mind |
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| occurs when consumers are unable to judge the quality of a produce through examination or prior experience |
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the practice of setting a limited number of different specific prices, called price points, for items in a product line EX base model - $20,000 EX model - $22,000 EX-S model - $26,000 |
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