PRICEVOCABULARY

Price• The value of a product expressed in dollars.

Break-Even Point• Point at which revenue from sales equals

costs.

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

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?

Pricing Objectives

• Goals that tell what a marketer wants to achieve through pricing.

Psychological Pricing

• Set of pricing techniques used to create an image of a product to entice customers to buy.

List Price• Established price of a product as published in

a catalog or on a price tag.

Market Price• Actual price you pay for a product, after any

discounts or coupons are deducted.

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.

Price Discrimination• Situation in which a company plays favorites

by charging lower prices to some companies for the same products.

MSRP• The retail price that the manufacturer

recommends.

Unit Pricing

• Displaying the price of an item based on a standard unit of measure, such as an ounce or a pound.

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.

Price Channels

B2B B2B B2C

Manufacturer WholesalerRetailer Consumer

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.

Cash Discount

• A reduction in price is offered to retailers who pay their bills promptly. (B2B)

Promotional Discount

• A discount is given in exchange for the customers promoting the product. (B2B)

Quantity Discount

• A discount is given for a large order. (B2B)

Seasonal Discount

• A discount is given when a retailer buys in advance of the season. (B2B)

Trade Discount

• A discount is given as a way to quote the price to the customer, based on the list price of MSRP. (B2B)