261 Copyright Goodheart-Willcox Co., Inc. Objectives After completing this section, you will be able to: • Define price as it applies to the four Ps of marketing. • Describe factors that impact pricing decisions. • Explain the importance of establishing pricing objectives. • Describe the different pricing strategies. • Give examples of different pricing techniques. • Identify technology that can be used to set prices. Key Terms value list price selling price manufacturer’s suggested retail price (MSRP) pricing objectives profit margin market share return on sales (ROS) return on investment (ROI) pricing strategies cost-based pricing markup keystone pricing demand-based pricing competition-based pricing psychological pricing Critical Thinking To be competitive, you may offer discounts or different pricing options for customers. Research the companies that will compete with your business. What pricing models do they use? SECTION 10.2 Price What Is Price? Price is the amount of money requested or exchanged for a product. It is also one of the four Ps of marketing. Correctly pricing goods and services is a challenge for every business. There are three important parts to determining a correct price. The price: • must cover the costs of producing and selling the product • should provide the desired level of profit for the business and • must be what customers are willing to pay for the product. Some customers base purchases on product price alone. Value is another important factor in pricing. Value is the relative worth of something to a person. Some business owners use price to establish and communicate the value of a product in the customer’s What decisions must businesses make about product pricing? What decisio mu st busines FYI A small business may be able to charge higher prices because of excellent, personalized service to its customers. That service is the business’ value proposition or unique selling proposition.