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2-19 and 2-21 Marketing Primer

Costs another name for fixed costs is indirect costs

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Unformatted text preview: Price – Variable cost) Breakeven point in dollars Total fixed cost / (1 – (Variable cost / Price) ) PRICING STRATEGIES PRICING • Cost-based pricing measures cost of producing a product including materials, labor, and overhead. • Target Costing -- Making the final price of a product an input in the product development process by estimating the selling price consumers will pay. • Competition-Based Pricing -- A strategy based on what the competition is charging for its products. Pricing Alternatives • Skimming Price Strategy -- Pricing new products high to recover costs and make high profits while competition is limited. • Penetration Price Strategy -- Pricing products low with the hope of attracting more buyers and discouraging other companies from competing in the market. • Everyday Low Pricing (EDLP) -- Setting prices lower than competitors with no special sales. Pricing Strategies of Retailers Pricing • High-Low Pricing -- Using regular prices that are higher than EDLP except during special sales when they are lower. • Psychological Pricing -- Pricing products at price points that make a product seem less expensive than it is. Take Aways Differentiate!!!!!!!! Do not wait for customers to come to you, make it possible for them to buy your product; Never, never, ever price at cost plus!!!!!! Never, never, ever confuse promotion with merely advertising!!!!!!! Heck, never, never, ever confuse marketing with merely advertising!!!!...
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