Economics 10
- Created by: Gabrielle
- Created on: 30-12-13 11:52
View mindmap
- Pricing Strategies
- Cost Plus
- calculate cost of production per unit and set price above this cost
- Psychological pricing
- based on assumption consumers do not behave rationally, e.g. £0.99 vs £1
- Penetration pricing
- –price set to penetrate the market – encourage volume sales
- predatory pricing
- price set to drive out competition
- Loss leader
- price set below cost to encourage sales of other products
- Premium or value pricing
- price set to reflect exclusivity on low volume high margin products
- Competition pricing
- price set in relation to rival sellers
- Price leadership
- where a firm is dominant in a market
- Marginal cost pricing
- price based on marginal cost
- Under perfect competition, firms cannot influence price
- Under imperfect competition, firms can set the price
- A monopoly faces a downward sloping demand curve
- Firms in competitive markets face a horizontal demand curve
- Price discrimination is the business practice of selling the same good at different prices to different customers
- Cost Plus
Comments
No comments have yet been made