262 Chapter 10 Product, Price, and Place Copyright Goodheart-Willcox Co., Inc. mind. Customers may be willing to pay more if they believe in the value of the product or service. A product’s value proposition or unique selling proposition explains the value of the product over others that are similar. Creating a pricing policy is an important task for a business owner. A pricing policy is how a business sets its wholesale and retail prices based on product cost, demand for a product, perceived value, and competition in the market. Accurately establishing product prices plays an important role in the success of a business and its profitability. List Price Most businesses have several tiers, or levels, of pricing. The list price is the established price printed in a catalog or on a price tag. The list price does not include any discounts, or price reductions. List price is sometimes referred to as full price. Selling Price The selling price is the price a customer actually pays for the product after discounts and coupons. It may also be called the market price. Discounts are shown as a percentage, such as 40 percent off, or as a dollar figure, such as $20 off. For example, an item you want to purchase has a list price of $100. It also has an advertised 40 percent discount. After applying the discount, the selling price is $60. A MSRP reduces price competition among similar products. iStock.com/Yuri