Anchor pricing takes advantage of the human tendency to rely too heavily on the first piece of information received and make later judgements in relation to it.
The practices of bundling products and services into a "package deal" with a single price or breaking them out into separate line items.
The terms "bundling", "pure bundling" and "mixed bundling" are often used interchangeably but there are important differences between them.
The loss, or cannibalization, of per-unit profit when a product is discounted.
Charm pricing, the practice or ending prices with the number nine, is one of the most common pricing tactics.
Understanding that different people have differing degrees of sensitive to price depending on the situation and the product helps price more effectively.
Part of a larger price discrimination strategy hurdles are used to separate those customers that place a lower value on a product and offer them prices tailored to that valuation.
The term differential pricing is often used as an alternative to price discrimination, but differential pricing may also involve a higher degree of product differentiation.
With increased consumption of a product there is a decline in the marginal utility that comes from the consumption of each additional unit.
Part of a larger price discrimination strategy hurdles are used to separate those customers that place a lower value on a product and offer them prices tailored to that valuation.
The inverse relationship between quantity and price – as price increases demand decreases. Similarly a decrease in price will result in greater demand.
Price discrimination, also referred to as price differentiation or differential pricing, involves selling identical, or very similar, products at different prices.
If you do any reading or research about pricing you will come across the term “price elasticity”. Shortened from “price elasticity of demand” this is important (but easy) to understand.
Distinguishing products to make them more attractive to a particular target market and, hopefully, more profitable. This can involve differentiating from competitors' products or a firm's own products.
Reservation price (sometimes referred to as reserve price) is the limit on the price of a good or service.
Selling the right product to the right customer at the right time for the right price and with the right pack size.
Slack fill, de-sheeting and weight-out – different terms describing the common practice of stealthily increasing price by decreasing quantity.
Be prepared when you hear someone dismiss good profit with a comment like "sure, but profit is just a trailing indicator" by understanding the term.
Veblen goods contradict the law of demand. Demand for a Veblen good increases, rather than decreases, alongside increases in price.
Veblen goods contradict the law of demand. Demand for a Veblen good increases, rather than decreases, alongside increases in price.
Movie theater snack combos provide interesting real-world examples of both pure and mixed bundling.