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PRICEVOCABULARY
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Price• The value of a product expressed in dollars.
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Break-Even Point• Point at which revenue from sales equals
costs.
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Break-Even Point• $5.75 x 200 = number of boxes purchased• 200 x 15 = number of candy bars purchased• $5.75/15 = cost per unit• $1 – cost per unit = profit per candy bar
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Break-Even Point• You are holding a school fundraiser by selling
candy bars.• It costs the school $5.75 per box of candy bars
and there are 15 candy bars in a box.• You are selling the candy bars for $1 a piece.• If the school buys 200 boxes of candy bars
how many bars will you need to sell to break-even?
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Pricing Objectives
• Goals that tell what a marketer wants to achieve through pricing.
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Psychological Pricing
• Set of pricing techniques used to create an image of a product to entice customers to buy.
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List Price• Established price of a product as published in
a catalog or on a price tag.
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Market Price• Actual price you pay for a product, after any
discounts or coupons are deducted.
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Price-Fixing• Situation in which a group of competitors gets
together and sets (fixes) the price for a specific product; they then all agree to sell that product for the same price.
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Price Discrimination• Situation in which a company plays favorites
by charging lower prices to some companies for the same products.
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MSRP• The retail price that the manufacturer
recommends.
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Unit Pricing
• Displaying the price of an item based on a standard unit of measure, such as an ounce or a pound.
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Return on Marketing Investment (ROMI)
• Ratio that ells a business how much it earned as a percentage of the investment it made to earn the money.
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Price Channels
B2B B2B B2C
Manufacturer WholesalerRetailer Consumer
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Discount Pricing• Business that sell to other businesses often
use discount pricing.• Discount pricing offers a reduction from the
regular or list price of a product.
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Cash Discount
• A reduction in price is offered to retailers who pay their bills promptly. (B2B)
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Promotional Discount
• A discount is given in exchange for the customers promoting the product. (B2B)
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Quantity Discount
• A discount is given for a large order. (B2B)
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Seasonal Discount
• A discount is given when a retailer buys in advance of the season. (B2B)
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Trade Discount
• A discount is given as a way to quote the price to the customer, based on the list price of MSRP. (B2B)