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PRICING & COSTING

QuestionAnswer
One of the company’s core financial statements that shows their profit and loss over a period of time Income Statement
The profit or loss is determined by taking all revenues and subtracting all expenses from both operating and nonoperating activities Income Statement
The language of business Accounting
Process of recording financial transaction pertaining to a business Accounting
Includes summarizing, analyzing, and the reporting these transactions to oversight agencies, regulators, and tax collection entities. Accounting
Formal records of the financial activities and position Financial Statement
Relevant financial information is presented in a structured manner, in which is easy to understand Financial Statement
The overview of the assets, liability, and owner's equity as a snap shot in time. Balance Sheet
How well a company's generate cash to pay its debt obligation once its operating expenses as well as the fund expenses. Statement of Cash Flows
Financial statement that shows you the company’s income and expenditures Income Statement
Important/relevant details for the transaction Disclosure
It is what you pay for services or good you acquired Price
It is the number of inputs that incur in producing the product of the firm Cost
They track how much it cost to produce a good or service. Cost of Sales/Cost of Good Sold
The largest expense that a business incurs Cost of Sales/Cost of Good Sold
Expense that incurred by a business to sell its output Cost of Sales/Cost of Good Sold
Rent, tuition, fee, fare, utilities, interest Price
It is important because its the primary motivation to make a profit. Price
It is the process of assigning a selling price to a good or service Price
Expressed either in monetary of non-monetary terms in exchange for a service or product Price
Oldest form of commerce-the exchange of goods and services between two or more parties without the use if money. Barter system (Bartering)
Price is revenue Seller
Price is the cost of something Consumer
It allocates resources in a free market economy Price
Remain the same regardless of sales Fixed cost
Change based on your sales activity Variable cost
Price of your products helps create your image in the minds of customers; If prices is too low, customers might think of your product as inferior;If too high, the price might scare customers away Consumer perception
It can affect pricing when the target market is price conscious because competitors’ pricing may determine your pricing Competition
When companies set the prices of a product instead of market forces; Pricing above the marker when no other retailer is available Price fixing
An illegal practice in which companies restrict prices within a specified range Price Gouging
price fixing imposed by a manufacturer on wholesale or retail resellers of its products to deter price-based competition (illegal) Resale price maintenance
the pricing of goods based on cost per unit of measure, such as a pound or an ounce, in addition to the price per item Unit pricing
deceptive method of selling in which a customer, attracted to a store by a sale priced item, is told either that the advertised item is unavailable or that it is inferior to a higher-priced item that is available. Bait and switch
It is based on the cost of ingredients & operating expense of the business. Cost based pricing
Based on how much customers will pay for your product; Luxury (perception to spend) Value based pricing
Useful when the product is homogenous, and market is highly competitive. Companies try to maintain the price of its products more or less at par with competition price. Competition based pricing
Helps to control costs, make decisions and plan for the future. Importance of knowing your cost
helps to set the appropriate prices so that the business makes a profit Importance of knowing your cost
It is the money your business spends to make and sell your goods or services. Cost
It is anything that contributes to the expense of the product or service provided by a business Cost
The costs associated with your business's product that must be paid regardless of how much you sell. (RENT, PAYROLL, EQUIP DEPRE) Fixed Costs
The costs directly related to the sales volume of your business. (DELIVERY, SALES COMMISSION, ADVERTISING) Variable Costs
The amount of the product selling price over and above the variable cost per unit Unit Contribution Margin
the calculation of all of the costs that go into making and selling a good or providing a service Costing
The making of gain in business activity for the benefit of the owners of the business Profit
The total amount of money that firm receives from sales of its product or other sources. Total Revenue
The cost of all factors of production Total Cost
Profit is the return for taking a risk True
Profit measures the success of an investment True
Profit is an important source of finance True
It is a strategic challenge with a direct impact on profitability. Pricing on profitability
It requires a breadth of information and the right perspective, as well as the ability to balance competing agendas. Pricing on profitability
It refers to the act of gathering information, conducting quantitative analysis, and revealing an accurate understanding of the range of prices likely to yield positive results Science of Pricing
It demonstrates the impact of a small change in price on profits. Profit Sensitivity Analysis
It is seen in linear relationship between profits and prices Direct effect
It derives from the influence of price changes on customer demand Indirect effect
It defines the required demand increase to justify a price cut and the allowable demand sacrifice to justify a price hike. Volume hurdle
In strategic decisions to attack a specific market at a new price point, volume hurdles enable executives to quantify the required selling goals and compare them against their expectations of potential demand. True
Good pricing starts with understanding of HOW customers’ perceptions of value affect the prices they are willing to pay Both customers & industrial buyers balance the price of a product against the benefit of owning it True
Before setting the price of a product, the marketer must understand the relationship between price and demand for the company’s product True
(Pricing in different types of markets) Many buyers and sellers who have little effect on the price Pure Competition
(Pricing in different types of markets) Many buyers and sellers who trade over a range of prices Monopolistic Competition
(Pricing in different types of markets) Few sellers who are sensitive to each other's pricing/marketing strategies Oligopolistic Competition
(Pricing in different types of markets) Single Seller Pure Monopoly
A curve that shows the number of units the market will buy in a given time period, at different prices that might be charged. Demand curve
a graph of the quantity of products expected to be sold at various prices if other factors remain constant Demand curve
A shift in the demand curve is when a determinant of demand other than price changes. True
Factors that cause a demand curve to shift: -Income of the buyers -Consumer trends -Expectations of future price -The price of related goods -The number of potential buyers
It is also termed as Price Elasticity of Demand Price Sensitivity
It refers to the degree or extent to which the consumer's buying behavior varies with the change in the price of the product or service Price Sensitivity
Product differentiation and its unique features, shades the consumer’s price sensitivity towards it. With the unique value products or services, the organization can win over its competitors. Unique Value
Created by: rainee_
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