BUS 371 CH 13A KEY TERMS

Question	Answer
Cost-plus pricing	A pricing method in which a predetermined markup is applied to a cost base to determine the target selling price.
Economic value to the customer (EVC)	The price of a customer’s best alternative (called the reference value) plus the value of what differentiates a product from that alternative (called the differentiation value).
Markup	The difference between the selling price of a product or service and its cost. The markup is usually expressed as a percentage of cost.
Price elasticity of demand	A measure of the degree to which a change in price affects the unit sales of a product or service.
Target costing	The process of determining the maximum allowable cost for a new product and then developing a prototype that can be profitably made for that maximum target cost figure.
Value-based pricing	A pricing method in which a company establishes selling prices based on the economic value of the benefits that their products and services provide to customers.

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	Created by Jamie Plym about 3 years ago