A pricing strategy where companies charge the maximum amount customers are willing to pay.
A Clearing Market is a situation in which supply and demand reach equilibrium quickly, resulting in no excess supply or demand at the market price. Typically, this involves short-lived goods where suppliers are motivated to sell their inventories promptly without price constraints.
A method to establish the selling price of a product or service by estimating the total cost and adding a percentage mark-up to achieve a profitable price.
Cross-price elasticity measures the extent to which the price of a specified good is affected by the price of another complementary or substitute good. It is a crucial concept in microeconomics that helps understand the interdependencies between different products in the market.
A distribution allowance is a price reduction offered by a manufacturer to a distributor, retail chain, or wholesaler to cover the cost of distributing the merchandise, often used during new product introductions.
Dumping refers to the practice of selling goods at a price lower than their cost or lower than the price charged in the domestic market. This is done to eliminate surplus, undermine foreign competition, or dispose of goods unacceptable for the domestic market.
Eating a competitor's lunch refers to aggressively outperforming and gaining market share from competing firms through strategies like aggressive pricing, superior product offerings, or enhanced customer service.
The equilibrium price is the price at which the quantity of goods producers wish to supply matches the quantity demanders want to purchase.
A flat rate, also known as a fixed rate, is a price that remains constant irrespective of the quantity purchased or other considerations. It is commonly used in various fields including advertising and direct marketing.
Leader pricing is a strategic reduction in the price of a high-demand product to attract customers to a retail store or to stimulate a direct-mail purchase, potentially inspiring additional full-price purchases. Also known as loss leader pricing.
A product or service offered for sale by an organization at a loss in order to attract customers for other products or services.
A marketability study is an in-depth analysis aimed at determining the likely sales success and marketability of a specific product for a particular client. It involves gathering data on market prices, quantities, and types of products that are currently selling.
Marketing encompasses the strategic activities involved in promoting the sale of goods or services. This discipline is centered around the Four Ps: product, price, place, and promotion.
The amount by which the cost of a service or product has been increased to arrive at the selling price. It is calculated by expressing the profit as a percentage of the cost of the good or service.
The normal price refers to the price level that goods or services typically command in a market over the long term. It is a stable price expectation absent extraordinary market fluctuations like sudden shortages or surpluses.
Predatory pricing involves deliberately lowering prices of merchandise or services to drive competitors out of the market, with the intent to raise prices once the competition is eliminated.
Prestige pricing is a pricing strategy that entails setting prices at a higher level to reflect the assumption that consumers associate higher prices with higher quality. This strategy targets consumers who value premium products and are willing to pay more for perceived superior quality.
Price elasticity is a measure of the responsiveness of the quantity demanded or supplied of a good to changes in its price. It helps businesses and economists understand the impact of price changes on supply and demand.
Price flexibility refers to the economic circumstance where prices are permitted to vary considerably in response to changes in supply and demand.
In an oligopolistic industry, a price leader is the firm whose output pricing decisions are most likely to be matched by other firms. This role sets the industry standard for pricing and significantly influences market dynamics, leading to reduced competition.
Pricey refers to products or services offered at prices at or near the top of what the market will bear, or in investment terms, offering or bidding prices that are significantly above or below the current market value.
Rate of return pricing involves setting prices for a range of products so that they achieve a predetermined rate of return or return on capital employed (ROCE). This pricing strategy aligns pricing decisions with the financial objectives of earning a specific return, ensuring that the company meets its profitability targets.
The highest price a buyer can pay and still achieve their primary objectives, such as keeping monthly payments affordable or paying no more than the market value for the property.
A rigid price (also referred to as an administered price) is a pricing strategy wherein the price of a product or service remains unchanged despite ongoing shifts in market demand and supply conditions.
Strategic management accounting is a management accounting system focused on long-term strategic decision-making, providing vital insights for pricing strategies and capacity expansion.
Substitutes are products or services that can be used in place of each other, fulfilling similar needs or functions. Substitutes play a crucial role in determining market dynamics and consumer choices.
A strategic method for pricing products or services based on the price customers are willing to pay, ensuring both market competitiveness and profitability.
Goods or services sold at the full established price without allowances or discounts.
The price paid per unit of item purchased or charged per unit of product sold, representing the cost associated with a single unit of a product or service.
The Unit Standard Selling Price is a predefined rate at which a product or service is intended to be sold, expressed on a per-unit basis.
A Volume Discount is a pricing strategy where a seller offers a lower price per unit of a product when purchased in larger quantities. This encourages buyers to purchase more to gain the benefit of lower unit costs.
The Wheel of Retailing is a retail marketing process through which original low-price discounters upgrade their services and gradually increase prices. This evolution into full-line department stores creates an opportunity for new low-price discounters to enter the market, perpetuating a continuous cycle.
