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22 terms

Setting Pricing

price skimming
A pricing policy whereby a firm charges a high introductory price, often coupled with heavy promotion.
penetration pricing
Pricing strategy in which the seller charges a low price on a new product to discourage competition and gain market share.
price fixing
an agreement among firms to charge one price for the same good
predatory pricing
selling a product below cost to drive competitors out of the market
cash discount
A deduction that a vendor allows on the invoice amount to encourage prompt payment
functional discount
a discount to wholesalers and retailers for performing channel functions
promotional allowance
a payment to a dealer for promoting the manufacturer's product
value based pricing
uses the buyers perceptions of value, not the sellers cost, as the key to pricing
FOB origin pricing
A price tactic that requires the buyer to absorb the freight costs from the shipping point ("free on board")
uniform delivered pricing
A price tactic in which the seller pays the actual freight chargers and bills every puchaser an identical, flat freight charge.
zone pricing
A modification of uniform delivered pricing that divides the United States (or the total market) into segments or zones and charges a flat freight rate to all customers in a given zone.
freight absorption pricing
a pricing tactic in which the seller absorbs the total cost of transportation
basing point pricing
customers pay shipping charges from set basing - point locations, whether the goods are actually shipped from these points or not
single price tactic
a tactic in which all goods are offered at the same price
flexible pricing
A price tactic in which different customers pay different prices for essentially the same merchandise bought in equal quantities.
price lining
a pricing technique in which items in a certain product line are priced the same.
two part pricing
offering two separate types of payment to purchase a product
product line pricing
Setting prices for an entire line of products.
joint costs
Costs that are shared in the manufacturing and marketing of several products in a product line.
delayed quotation pricing
a price tactic used for industrial installations and many accessory items in which a firm price is not set until the item is either finished or delivered.
escalator pricing
A price tactic in which the final selling price reflects cost increases incurred between the time the order is placed and the time delivery is made.
price shading
the use of discounts by salespeople to increase demand for one or more products in a line