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Pricing 100 200 300 400 500 100 200 300 400 500 200 300 400 500 200 300 400 500 200 300 400 200 300 400 500.

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Presentation on theme: "Pricing 100 200 300 400 500 100 200 300 400 500 200 300 400 500 200 300 400 500 200 300 400 200 300 400 500."— Presentation transcript:

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2 Pricing 100 200 300 400 500 100 200 300 400 500 200 300 400 500 200 300 400 500 200 300 400 200 300 400 500

3 Answer: Psychological pricing is correct—for example, $5.99 sounds less expensive than $6.00 ? This is an example of _____ pricing:

4 ? Sometimes stores sell items below cost in the hopes of getting you in the store and then hoping you will buy more items. These items are called ____ ____. Answer: If you answered loss leaders, you are correct! Businesses might sell items like sodas really cheap for Super Bowl parties and hope you will fill your cart with other items.

5 ? With this type of pricing, you submit, or tender, an offered amount to complete a job. Answer: Did you answer closed-bid pricing? If so, you are correct! Think about construction jobs, government contracts, etc. Your company would be bidding against other companies for the job.

6 ? Look at the Coach handbag below. When consumers expect to pay a certain amount for a product, and would think it strange if the item was priced too low, this would be called _____ pricing. Answer: This is customer-value pricing. Remember the Manolo Blahnik shoes we looked at? You wouldn’t expect to pay $50 for those!

7 ? An example of a price follower would be Coca- Cola. Answer: False—Coca-Cola is a price leader. Other soda manufacturers follow their lead when it comes to pricing.

8 Answer: Hmm—I’d go with destroyer pricing. A good example of this would be airlines trying to drive other airlines out of business. ? Sometimes companies slash their prices in the hope of putting other companies out of business. This is called _____ pricing.

9 Answer: Did you say penetration pricing? That’s correct. ? When a company enters a market and sells a product for a low price and hopes to hook consumers, and then starts to raise prices, this would be called _____ pricing.

10 Answer: This is market skimming. Oftentimes, manufacturers of new products use this method. ? Sometimes a company will set a high price for a product when they first begin to sell in the hopes of making as much profit as possible. When competitors enter the market, they have to lower their prices. What is this called?

11 Answer: This is price discrimination. Companies sometimes give students and seniors a break for things like movies, bus fares, fast food, etc. ? If a teenager gets a discounted rate at the movies, and an adult has to pay $1.00 more to see the same movie, this would be called _____ _____ which is a common pricing method.

12 Answer: Promotional pricing is the correct answer. ? This kind of pricing is used for special events like clearance sales, white sales, seasonal sales, etc.

13 ? When businesses set their prices based on their competitors’ prices, this is called _____ _____ _____. Answer: Did you remember the term going-rate pricing? A great example of this would be competing gas stations or Pepsi and Coke.

14 ? This method of pricing is used when a markup is added to the cost of producing a product. Answer: This would be cost- plus pricing. If it cost you $15 to produce a pair of shoes and you wanted a 100% markup, you would sell the shoes for $30.

15 ? Using this type of pricing, you set your price based on how much more it would cost to produce one additional unit. For example, if your cost for a product is $8 and you decide to produce 1 additional unit which costs you.15, your new price would be $8.15. Answer: This is marginal-cost pricing.

16 ? With this type of pricing, you spread the indirect costs of the business (heat, water, lights, rent, etc.) among your products. You charge more of the indirect costs to your best performing products. Answer: This is contribution pricing. Remember, it’s not the same as absorption or full-cost pricing.

17 ? Using this method of pricing, you take the indirect costs of your business (heat, lights, water, rent, etc.) and try to allocate the exact amount used to produce each product. For example, assume your building rent was $5,000 a month and you produced 2 types of products—sofas and chairs. It would take more space to make the sofas, so you would charge more of the rent to the cost of producing sofas. Answer: That was a lot to take in! The answer is absorption or full- cost pricing.

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