Chapter 6: The Pricing of Services Flashcards
The actual dollar price paid by the consumer for a product.
Monetary cost
The time the customer has to spend to acquire the service.
Time cost
The physical energy spent by the customer to acquire the service.
Energy cost
The mental energy spent by the customer to acquire the service.
Psychic energy
The worth assigned to the product by the customer.
Product value
The worth assigned to the service by the customer.
Service value
The worth assigned to the service-providing personnel by the customer.
Personnel value
The worth assigned to the image of the service or service provider by the customer.
Image value
Costs that are planned and accrued during the operating period regardless of the level of production and sales.
Fixed costs
Costs that are directly associated with increases in production and sales.
Variable costs
Based on the idea of the more you produce, the cheaper it is to produce it…. the cheaper it is to produce it, the cheaper it can be sold…. the cheaper it can be sold, the more is sold…. the more it is sold, the more it can be produced (and so on).
Economies of scale
The type of market demand when a change in the price of a service is greater than a change in quantity demanded.
Inelastic demand
A measure of the responsiveness of a demand for a service relative to a change in price for another service.
Cross-price elasticity
The effect of cross-price elasticity in which an increase in the price of product A decreases the demand for product B.
Complements
The effect of cross-price elasticity in which an increase in the price of product A increases the demand for product B.
Substitutes
