Price, the Only Revenue Generator

Read this chapter for a thorough treatment of the critical concept of price, which the authors note is the only means a company has of generating revenue. This chapter discusses the process companies must go through to effectively price their offerings, including identifying pricing objectives, accounting for the factors that affect pricing decisions, and implementing a pricing strategy. Pay attention to concepts of pricing basics, value pricing, target pricing, price sensitivity and elasticity, dynamic pricing, rack pricing, and loss leaders.

Pricing Strategies

REVIEW QUESTIONS

  1. Explain the difference between a penetration and a skimming pricing strategy.
  2. Describe how both buyers and sellers use sealed bid pricing.
  3. Identify an example of each of the following: odd-even pricing, prestige pricing, price bundling, and captive pricing.
  4. What is the difference between FOB origin and FOB destination when paying for shipping charges?
  5. Explain how trade allowances work.