274 Chapter 10 Product, Price, and Place Copyright Goodheart-Willcox Co., Inc. Section 10.2 Check Your Understanding 1. List three important considerations when determining price. 2. Give three examples of unfair and illegal pricing practices. 3. Describe the importance of supply and demand in pricing your product. 4. What are two commonly used pricing techniques? 5. List the five most popular forms of discount pricing. Build Your Vocabulary As you progress through this text, develop a personal glossary of key terms. This will help you build your vocabulary and prepare you for a career. Write a definition for each of the following terms and add them to your personal glossary. 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 Review Trade Discount A trade discount is the amount a vendor reduces the MSRP for businesses. This is a standard B2B procedure. Manufacturers give trade discounts to the stores so they can in turn resell the items at the full MSRP. This takes into account the fact that retailers must mark up product prices to make a profit. Prices After considering pricing factors, pricing objectives, pricing strategies, and pricing techniques, you are ready to set a price for the product or service. Review the mission statement and goals for the business to make sure the price is in line with what the business is trying to do. To streamline the process, many businesses use web-based pricing software or other pricing technology. Automating the process using technology makes it efficient and saves time in monitoring pricing. Remember that pricing strategies may change as a business grows. Take into account that most businesses cannot sell every product at the list price. Some products may be put on sale, some on permanent clearance, and some donated to a charity.