Allowance
Promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer's products in some way. (405)

Break-even pricing (target profit pricing)
Setting price to break even on the costs of making and marketing a product, or setting price to make a target profit. (396)

By-product pricing
Setting a price for by-products to make the main product's price more competitive. (404)

Captive-product pricing
Setting a price for products that must be used along with a main product, such as blades for a razor and film for a camera. (403)

Competition-based pricing
Setting prices based on the prices that competitors charge for similar products. (400)

Cost-plus pricing
Adding a standard markup to the cost of the product. (395)

Demand curve
A curve that shows the number of units the market will buy in a given period at different prices that might be charged. (392)

Discount
A straight reduction in price on purchases during a stated period. (405)

Dynamic pricing
The practice of charging different prices depending on individual customers and situations. (383)

f.o.b origin pricing
A geographic pricing strategy in which goods are placed free on board a carrier and the customer pays the freight from the originating point to the required destination.

Market-penetration pricing
Setting a low price for a new product to attract a large number of buyers and a large market share. (401)

Market-skimming pricing
Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales. (401)

Optional-product pricing
The pricing of optional or accessory products along with a main product. (402)

Price elasticity
A measure of the sensitivity of demand to changes in price. (393)

Price
The amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service. (383)

Product bundle pricing
Combining several products and offering the bundle at a reduced price. (404)

Product line pricing
Setting the price steps among various products in a product line based on cost differences among the products, customer evaluations of different features, and competitors' prices. (402)

Promotional pricing
Temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales. (409)

Psychological pricing
A pricing approach that considers the psychology of prices and not simply the economics; the price is used to say something about the product.

Reference prices
Prices that buyers carry in their minds and refer to when they look at a given product. (406)

Segmented pricing
Selling a product or service at two or more prices, where the difference in prices is not based on differences in costs. (406)

Target costing
Pricing that starts with an ideal selling price, then targets costs that will ensure that the price is met. (388)

Uniform delivered pricing
A geographic pricing strategy in which the company charges the same price plus freight to all customers, regardless of location (410)

Value-based pricing
Setting price based on buyers' perceptions of value rather than on the seller's cost. (397)

Zone pricing
A geographic pricing strategy in which the company sets up two or more zones. All customers within a zone pay the same total price: the more distant the zone, the higher the price. (411)