Marketing

• Price should never be just about cost plus mark-up, it should be a tool for communication and strategy.
• The origins of pricing can be traced back to two elements: mass production and transportation.
• Unit variable cost is the amount it would cost to manufacture one unit.
• Fixed cost is the unit sharing or operating expenses.
• Product cost estimation involves considering both unit variable cost and fixed cost.
• Suggested retail price (SRP) denotes the price that a consumer product is expected to be sold at over the counter and in stores.
• The emergence of SRP can be attributed to the elements of mass production and transportation.
• Pricing at the going rate involves setting the same price as or very close to its competitors.
• Going rate pricing is a strategy involving a temporary reduction in the selling price of a product/ service in order to induce trial or to encourage repeat purchase.
• If the product is new to the market, price skimming involves pricing the product above its unit cost.
• Penetration pricing involves pricing a new product only marginally above its unit cost.
• Unit variable cost is how much it would cost to manufacture one unit.
• Fixed cost is the unit sharing or operating expenses.
• Direct materials include all the wages for all workers directly responsible for making the product.
• Direct labor is the amount that was spent in the manufacturing overhead (energy, water, and other utility costs) for every shirt produced.
• Mark-up pricing allows the seller a fixed mark-up every time the product is sold.
• Target return pricing allows a product manufacturer to recover a certain portion of his/her investment every year.
• Psychological pricing or odd pricing is a pricing method premised to the theory that consumers will perceive products with odd price ending as lower in price than they actually are.
• Loss leader pricing is based on the practice of housewives to use only a few selected essential products (eg. sugar, coffee, eggs, laundry detergents, and some canned goods) as their sole basis for price comparison.
• Preferential pricing is a pricing strategy where the firm prices its product lower than unit variable cost, initially resulting in short term losses.