Marketing 305 Chapter 14 Arriving at The Final Price

Skimming Pricing
Setting the highest initial price that customers really desiring the product are willing to pay when introducing a new or innovative product.
Penetrating Pricing
Setting a low initial price on a new product to appeal immediately to the mass market.
Prestige Pricing
Setting a high price so that quality-or-status-conscious consumers will be attracted to the product and buy it.
Price Lining
Setting the price of a line of products at a number of different specific pricing points.
Odd-even Pricing
Setting prices a few dollars or cents under an even number.
Target Pricing
Estimating the price that consumers would be willing to pay for a product.

Working backward through markups taken by retailers and wholesalers to determine what price to charge wholesalers.

Adjusting the composition and features of the product to achieve the target price to consumers.

Bundle Pricing
Marketing of two or more products in a single package price.
Yield Management Pricing
Charging of different prices to maximize revenue for a set amount of capacity at any given time.
Standard Markup Pricing
Adding a fixed percentage to the cost of all items in a specific product class.
Cost-Plus Pricing
Summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price.
Experience Curve Pricing
Pricing based on the learning effect.
Customary Pricing
Setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors.
Above-, at, or below-market pricing
Setting a market price for a product or product class based on a subjective feel for the competitors’ price or market price as the benchmark.
Loss-leader Pricing
Deliberately selling a product below its customary price, not to increase sales, but to attract customers’ attention in hopes that they will buy other products as well.
One-Price policy
Setting one price for all buyers of a product or service.


Flexible Price Policy
Setting different prices for products and services depending on individual buyers and purchase situations.

Also called: Dynamic Pricing

Product Line Pricing
Setting of prices for all items in a product line to cover the total cost and produce a profit for the complete line, not necessarily for each item.
Price War
Successive price cutting by competitors to increase or maintain their unit sales or market share.
Promotional Allowances
Cash payments or extra amount of “free goods” awarded sellers in the channel of distribution for undertaking certain advertising or selling activities to promote a product.
Everyday low pricing (EDLP)
Replacing promotional allowances with lower manufacturer list prices.
FOB (Free on Board) Origin Pricing
Includes only the cost of loading the product onto the vehicle and specifies the name of the location where the loading is to occur (seller’s factory or warehouse)
Price Fixing
A conspiracy among firms to set prices for a product.
Price Discrimination
Practice of charging different prices to different buyers for goods of like grade and quality.
Predatory Pricing
Practice of charging a very low price for a product with the intent of driving competitors out of business.
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