Term
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Definition
| he total cost divided by the related quantity. |
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Term
| average fixed cost (per unit): |
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Definition
| the total fixed cost divided by the related quantity. |
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Term
| average variable cost (per unit): |
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Definition
| the total variable cost divided by the related quantity. |
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Term
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Definition
| adding a reasonable markup to the average cost of a product. |
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Term
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Definition
| setting some very low prices to attract customers but trying to sell more expensive models or brands once the customer is in the store. |
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Term
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Definition
| offering a specific price for each possible job rather than setting a price that applies for all customers. |
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Term
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Definition
| an approach to determine whether the firm will be able to break even--that is, cover all its costs--with a particular price. |
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Term
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Definition
| the sales quantity where the firm's total cost will just equal its total revenue. |
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Term
| complementary product pricing: |
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Definition
| setting prices on several related products as a group. |
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Term
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Definition
| setting an acceptable final consumer price and working backward to what a producer can charge. |
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Term
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Definition
| the selling price per unit minus the variable cost per unit. |
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Term
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Definition
| setting prices for a whole line of products. |
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Term
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Definition
| setting some very low prices--real bargains--to get customers into retail stores. |
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Term
| long-run target return pricing: |
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Definition
| pricing to cover all costs and over the long run achieve an average target return |
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Term
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Definition
| evaluating the change in total revenue and total cost from selling one more unit to find the most profitable price and quantity. |
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Term
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Definition
| the change in total cost that results from producing one more unit. |
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Term
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Definition
| profit on the last unit sold. |
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Term
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Definition
| the change in total revenue that results from the sale of one more unit of a product. |
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Term
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Definition
| a dollar amount added to the cost of products to get the selling price. |
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Term
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Definition
| the percentage of selling price that is added to the cost to get the selling price. |
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Term
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Definition
| the sequence of markups firms use at different levels in a channel--determining the price structure in the whole channel. |
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Term
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Definition
| a price that is set based on bargaining between the buyer and seller. |
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Term
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Definition
| setting prices that end in certain numbers. |
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Term
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Definition
| setting a rather high price to suggest high quality or high status. |
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Term
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Definition
| a seller who sets a price that all others in the industry follow. |
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Term
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Definition
| setting a few price levels for a product line and then marking all items at these prices. |
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Term
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Definition
| setting one price for a set of products. |
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Term
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Definition
| setting prices that have special appeal to target customers. |
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Term
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Definition
| the price a consumer expects to pay. |
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Term
| rule for maximizing profit: |
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Definition
| the highest profit is earned at the price where marginal cost is just less than or equal to marginal revenue. |
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Term
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Definition
| the number of times the average inventory is sold during a year. |
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Term
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Definition
| pricing to cover all costs and achieve a target return. |
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Term
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Definition
| the sum of total fixed and total variable costs |
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Term
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Definition
| the sum of those costs that are fixed in total--no matter how much is produced. |
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Term
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Definition
| the sum of those changing expenses that are closely related to output--such as expenses for parts, wages, packaging materials, outgoing freight, and sales commissions. |
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Term
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Definition
| setting prices that will capture some of what customers will save by substituting the firm's product for the one currently being used. |
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