Entrepreneurship - Chapter 11 Vocab

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22 terms

fixed

costs and expenses not subject to change depending on the number of units sold

variable

costs and expenses that are subject to change depending on the number of units sold

price gouging

pricing above the market when no alternative retailer is available

price fixing

an illegal practice in which competing companies agree, formally or informally to restrict prices within a specified range.

resale price maintenance

price fixing imposed by a manufacturer on wholesale or retail resellers of its products to deter price-based competition

unit pricing

the required pricing of goods on the basis of cost per unit of measure

bait-and-switch

a type of advertising that is a deceptive method of selling in which customers, attracted to a store by sale-priced items are told either that the advertised item is out of stock or is inferior to a higher priced item that is available

return on investment

the amount earned as a result of an investment

price skimming

involves charging a high price to recover costs and maximize profit as quickly as possible.

penetration pricing

builds sales by charging a low initial price to keep unit costs to customers as low as possible

psychological pricing

refers to pricing techniques that are based on the belief that customers perceptions of a product are strongly influences by price.

prestige pricing

a pricing technique in which higher than average prices are used to suggest status and prestige to the customer.

odd/even pricing

a pricing technique in which odd numbers are employed to suggest a bargain.

price lining

a pricing technique in which items in a certain category are priced the same.

promotional pricing

a pricing technique in which lower sales prices are offered for a limited period of time to stimulate sales.

multiple unit pricing

a pricing technique in which items are priced in multiples.

bundle pricing

a pricing technique in which several complementary products are sold at a single price

discount pricing

offers customer reductions from the regular price.

break-even point

the point at which the gain from an economic activity equals the cost incurred in pursuing it

selling price

the actual or projected price per unit.

markup

the amount added to the cost of an item to cover expenses and ensure a product.

markdown

the amount of money taken from the original price

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