BUS 201 Chapter Notes - Chapter 13: Psychological Pricing, Price Skimming, Fixed Cost
15 Dec 2015
School
Department
Course
Professor
Document Summary
Pricing- process of determining what a company will receive in exchange for its products. Pricing objectives- the goals that sellers hope to achieve in pricing products for sale. Pricing decisions are also influenced by the need to compete in the marketplace, by social and ethical concerns. The sellers pricing decision is critical for determining the firm"s revenue which is calculated: Market share (or market penetration)- a company"s percentage of the total industry sales for a specific product type. Cost-oriented pricing- pricing that considers the firm"s desire to make a profit and its need to cover production costs. Markup- amount added to an item"s purchase cost to sell it at a profit. Markup percentage= markup/sales price, this determines the markup percentage and determines what percent of every dollar of revenue is gross profit. Fixed cost- cost that is incurred regardless of the quantity of a product produced and sold.
