BUSMKT 1040 Chapter 11: Chpt. 11 - Pricing Products and Services
Document Summary
Section 1 - recognizing the nature and importance of price. Enough prospective customers are willing to buy the product immediately at the high initial price to make these sales profitable: 2. The high initial price will not attract competitors: 3. Lowering price has only a minor effect on increasing the sales volume and reducing the unit costs: 4. Many segments of the market are price sensitive: 2. A low initial price discourages competitors from entering the market: 3. Unit production and marketing costs fall dramatically as product volumes increase: a firm using penetration pricing may, maintain the initial price for a time to gain profit lost from its low introductory level, b. Involves summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price. Cost-plus percentage-of-cost pricing: a fixed percentage is added to the total unit cost. Often used to price one- or few-of-a-kind items: 2.
