Price - Amount of money exchanged for a particular product.

The Barter System - Exchanging a product (good or service) for another product without a medium.

Product Value- Value in marketing based on the evaluation of the customers and benefits & cost of products compared to others.

Forms of Price-

Premium Pricing- Establish a price higher than competitors

Penetration Pricing- Start with a low price and slowly rise the price

Economy Pricing- low cost and bare minimum to keep the price low

Price skimming- Start with a higher price and gradually lower it for best advantages.

Psychological Pricing- Using a price that looks less and better to customers.

importance of price- Pricing represents the value for the product and what people are willing to pay, and it is the most important decision a marketer can make.

6 steps for determining price

step 1- Establish price objectives - use specific and realistic company goals to make profits and expand the market.

6 steps for determining price

step 2- determine costs- Determine the cost of materials, products, and how much it will cost to run the business

6 steps for determining price-

step 3- estimate demand- determine the estimated demand so you can relate it to properly pricing the product.

steps for determining price

step 4- study competition - compare and study competitors prices

steps for determining price

step 5- decide on a pricing Strategy - determine a pricing strategy that will benefit the market and product best.

Steps for determining price

step 6 - set price - after evaluating all other steps determine the best price for your product.

return on investment (roi) - comaprison of the profit from the money spent on the product.

Return on investment example -

roi is 22% , it cost $12 to make the product.

What should you charge ? $14.64

because .22 x 12 = 2.64 + 12 = $14.64

break-even point- point when sales revenue equals cost of the product.

demand elasticity - inelastic- when the change in price has little effect on demand

elastic- when the change in price causes a change in demand

Law of Diminishing Marginal Utility - Law stating that customers consumption of a product is constant even if the price is low.

Price fixing- When competitors agree on a certain price range to eliminate competition.

price discrimination - Charging a different price for certain customers in particular situation

Clayton Anti-Trust Act 1914 - Amendment that provides clarification to price fixing and price discrimination.

Robinson-Patman Act of 1936 - federal law that prohibits price discrimination and anti competitive practices.

1975 Consumer Goods Pricing Act - repeals the Sherman anti- trust act.

government regulations-

Minimum price laws - minimum percentage markup on the wholesale price.

Unit Pricing- identification of and labeling of items for sale with the retail price per unit, permitting easier price comparisons among similar products in different sized containers.

Price Advertising- Bait and switch

First, customers are "baited" by merchants's advertising products or services at a low price

Competition-Oriented pricing- Setting a price based on research, data, and analysis on target market.

skimming pricing- set a price high to attract competitors and then lower the price.