Flashcards in Topic 9 Pricing Deck (9)
What factors influence the price of a product?
1) Company factors e.g the available resources
2) Market factors e.g competition, consumer perception, distribution costs
3)Environmental factors e.g exchange rates
What is price elasticity of demand?
- Measures the effect of price change on demand
How do you calculate PED?
% change in quantity demanded divided by % change in price
What is the break even point?
- Point at which you are no longer making a loss nor are you making a profit
What are the three types of pricing?
What is price skimming?
Prices are set high to attract the least price sensitive in the market
- Appeals to opinion leaders who want the product first regardless of price
Whats penetration pricing?
- Pricing aggressively below completion to attempt to gain a large market share
- Risky as may make people establish it with a poor brand image
What is psychological pricing ?
-Using numbers such as £1500 rather than pricing with a 99p at the end
- Selling in bundles
- Odd even pricing e.g £2.99 rather than £3