B A 370 Chapter Notes - Chapter 15: Sherman Antitrust Act, Cash Register, Federal Trade Commission Act Of 1914
Document Summary
Cost-based pricing methods - determine the final price to charge by starting with the cost. Relevant cost and a profit are added, then this is divide by the total demand to arrive at a cost-plus price. Does not recognize the role that consumers" or competitors prices play in the marketplace. Requires that all costs be identified and calculated on a per-unit basis. Assumes that these costs will not vary much for different levels of production. Prices are usually set on the basis fo estimates of average costs. Competition-based pricing method - may set their prices to reflect the way they want consumers to interpret their own prices relative to competitors" offerings. Value-based pricing methods - approaches to setting prices that focus on the overall value of the product offering as perceived by the consumer. Consumers determine value by comparing the benefits they expect the product to deliver with the sacrifice they will need to make to acquire the product.
