What is the lowest level of production and sales at which a company can break even on a particular product?

Cost-volume-profit (CVP) formula:

px = vx + FC + Profit

p is the price per unit,
x is the number of units,
v is variable cost per unit and
FC is total fixed cost.

Describe three major types of pricing associated with business products.

Describe three major types of pricing associated with business products.

Setting prices for business products is different from setting prices for consumer products because of several factors, including the size of purchases, transportation considerations, and geographic issues.

The three types of pricing associated with business products are geographic pricing, transfer pricing, and discounting.

Explain the different strategies available to companies for setting prices.

Explain the different strategies available to companies for setting prices.

Pricing strategies fall into five categories: new-product pricing, differential pricing, psychological pricing, product-line pricing, and promotional pricing.

Price skimming and penetration pricing are two strategies used for pricing new products.

Differential pricing can be accomplished through negotiated pricing, secondary-market pricing, periodic discounting, and random discounting.

Types of psychological pricing strategies are odd-number pricing, multiple-unit pricing, reference pricing, bundle pricing, everyday low prices, and customary pricing.

Product-line pricing can be achieved through captive pricing, premium pricing, and price lining.

The major types of promotional pricing are price-leader pricing, special-event pricing, and comparison discounting.

Examine the three major pricing methods that firms employ.

Examine the three major pricing methods that firms employ.

The three major pricing methods are cost-based pricing, demand-based pricing, and competition-based pricing.

When cost-based pricing is employed, a proportion of the cost is added to the total cost to determine the selling price.

When demand-based pricing is used, the price will be higher when demand is higher, and the price will be lower when demand is lower.

A firm that uses competition-based pricing may choose to price below competitors' prices, at the same level as competitors' prices, or slightly above competitors' prices.