product line pricing

(noun)

the practice of charging different amount for goods or services that are variations on a base good or service

Related Terms

Examples of product line pricing in the following topics:

  • Product Line Pricing

    • Line pricing is the use of a limited number of price points for all the product offerings of a vendor.
    • Line pricing is the use of a limited number of prices for all the product offerings of a vendor.
    • Line pricing serves several purposes that benefit both buyers and sellers.
    • From the seller's point of view, line pricing holds several benefits:
    • The product and service mix can then be tailored to select price points.

  • Product Line Breadth

    • What products will be offered (i.e., the breadth and depth of the product line)?
    • The product mix (sometimes called "product assortment") is made up of both product lines and individual products.
    • A product line is a group of products within the product mix that are closely related, either because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets or fall within given price ranges.
    • An individual product is a particular product within a product line.
    • It is a distinct unit within the product line that is distinguishable by size, price, appearance, or some other attribute.

  • Settling the List Price

    • The high pricing of premium products is used to enhance and reinforce a product's luxury image.
    • Pricing is the process of determining what a company will receive in a sales exchange for its products.
    • Pricing is a key variable in micro-economic price allocation theory and part of the four "P's-" of the marketing mix; pricing, product, promotion and place.
    • The manufacturer's suggested retail price (MSRP), list price or recommended retail price (RRP) of a product is the price which the manufacturer recommends to the retailer.
    • A mistake in pricing will impact the bottom line of any business.

  • Impacts of Price Changes on Consumer Surplus

    • Consumer surplus is defined, in part, by the price of the product.
    • Recall that the consumer surplus is calculating the area between the demand curve and the price line for the quantity of goods sold .
    • This means that consumers will be able to purchase the product at a lower price than what would normally be available to them.
    • So while more consumers will want to purchase the product because of its low price, they will not be able to.
    • When a price floor is set above the equilibrium price, consumers will have to purchase the product at a higher price.

  • The Demand Curve in Perfect Competition

    • A perfectly competitive firm faces a demand curve is a horizontal line equal to the equilibrium price of the entire market.
    • In a perfectly competitive market the market demand curve is a downward sloping line, reflecting the fact that as the price of an ordinary good increases, the quantity demanded of that good decreases.
    • This means that if any individual firm charged a price slightly above market price, it would not sell any products.
    • A strategy often used to increase market share is to offer a firm's product at a lower price than the competitors.
    • In a perfectly competitive market, firms cannot decrease their product price without making a negative profit.

  • Demand-Based Pricing

    • Price skimming is a pricing strategy where initially a product price is set very high, but lowered over time.
    • The goal of value-based pricing is to align the price with the value of the product.
    • The goal of value-based pricing is to align the price with the value of the product.
    • These include: price skimming, price discrimination and yield management, price points, psychological pricing, bundle pricing, penetration pricing, price lining, value-based pricing, geo and premium pricing.
    • Price points are prices at which demand for a given product is supposed to stay relatively high .

  • Interpretations of Price Elasticity of Demand

    • The effect of price changes on total revenue PED may be important for businesses attempting to distinguish how to maximize revenue For example, if a business finds out its PED is very inelastic, it may want to raise its prices because it knows that it can sell its products for a higher price without losing many sales.
    • Perfectly inelastic demand is graphed as a vertical line and indicates a price elasticity of zero at every point of the curve.
    • Elasticity along a straight line demand curve varies from zero at the quantity axis to infinity at the price axis .
    • Below the midpoint of a straight line demand curve, elasticity is less than one and the firm wants to raise price to increase total revenue.
    • Perfectly inelastic demand is graphed as a vertical line.

  • Status Quo

    • A status quo pricing objective is one that maintains current price levels or meets the price levels of the competition.
    • A status quo pricing objective is one that maintains current price levels or meets the price levels of the competition.
    • One competitor will lower its price, then others will lower their prices to match.
    • A small firm can avoid a price war by setting prices in line with its competition.
    • The price of a bottle of soda tends to be fairly consistent, be it a Coca-Cola product or a Pepsi product.

  • Introduction to Deadweight Loss

    • In a perfectly competitive market, products are priced at the pareto optimal point.
    • Consumer surplus is the gain that consumers receive when they are able to purchase a product for less than the price they are willing to pay; producer surplus is the benefit producers receive when the sell a product for more than they are willing to sell for.
    • Without the price ceiling, the producer surplus on the chart would be everything to the left of the supply curve and below the horizontal line where y equals the free market equilibrium price.
    • The consumer surplus would equal everything to the left of the demand curve and above the free market equilibrium price line.
    • With the price ceiling, instead of the producer's surplus going all the way to the pareto optimal price line, it only goes as high as the price ceiling.The consumer surplus extends down to the price ceiling, but it is limited on the right by Harberger's triangle.

  • The Demand Curve and Consumer Surplus

    • Consumer surplus is the difference between the maximum price a consumer is willing to pay and the actual price they do pay.
    • Consumer surplus is the difference between the maximum price a consumer is willing to pay and the actual price they do pay.
    • If a consumer would be willing to pay more than the current asking price, then they are getting more benefit from the purchased product than they spent to buy it.
    • The consumer surplus, as marked in red, is bound by the y-axis on the left, the demand curve on the right, and a horizontal line where y equals the equilibrium price.
    • An individual's customer surplus for a product is based on the individual's utility of that product.