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| Functional (trade) discounts | Price concessions which compensate intermediaries for providing such services as storage, handling, and selling | |
| Functional organisation | The organisation method which divides the marketing operation into groups according to their assigned tasks | |
| Experience-curve pricing | A strategy that takes into account the costs of competing firms based on their experience in producing goods | |
| Competition-oriented pricing | A strategy whereby prices are set based on what a firm’s competitors are charging | |
| Flexible pricing | Charging different prices to different customers usually based on negotiations and bargaining; it is rare but not unknown in the USA in consumer marketing, but is more prevalent in organisational marketing | |
| Customary pricing | Pricing that matches buyer’s expectations about the costs of certain items; prices reflect custom and tradition, and changes are infrequent | |
| Fair trade | The practice through which producers attempt to control the retail price of their products | |
| Skimming | A strategy that is characterised by a high initial prices and promotional expenditures; the intent is to “skim the cream” from the market before anyone else can serve it | |
| Discretionary income | The amount of personal income left after paying taxes, and after paying for necessities such as food, shelter, and clothing | |
| Disposable income | The amount of personal income left after taxes | |
| Downward-sloping demand, the law of | The law predicting that when the price of a good is raised, less of it is demanded | |
| Upward-sloping supply, the law of | The law stating that when the price of a good is raised (at the same time that all other things are held constant), more of it will be produced | |
| Elastic demand | A given percentage change in price results in a greater percentage change in the quantity Elasticity of demand = The degree to which the quantity produced and sold will increase in response to changes in price demanded | |
| Uniform delivered pricing | Freight charges are added to the base price of the product such as that all buyers pay the same price regardless of their location | |
| Price fixing | When competitors, through formal contracts or collusive actions, jointly agree upon prices | |
| Warranty | The producer’s assurance that the product will meet buyers’ expectations or that buyers will be compensated in some way if the product fails to meet expectations | |
| Penetration | Marketers set low initial prices in an attempt to capture mass markets | |
| Price lining | A manufacturer or retailer sets a limited number of prices for selected lines of products | |
| Product line pricing | Setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors’ prices | |
| Optional-product pricing | The pricing of optional or accessory products along with a main product | |
| Captive-product pricing | Setting a price for products that must be used along with a main product, such as blades for a razor and film for a camera | |
| By-product pricing | Setting a price for by-products in order to make the main product’s price more competitive | |
| Product bundle pricing | Combining several products and offering the bundle at a reduced price | |
| Discounts | The reduction from the list price to be paid by consumers which represents the revenue source for intermediaries | |
| Cash discounts | Price reductions given to buyers who pay for purchases within a stated period; they are not cash payments | |
| Quantity discount | A price reduction to buyers who buy large volumes | |
| Cumulative quantity discounts | A discount that applies to one buyer’s orders over a specified time-perhaps 6- or 12- month period | |
| Functional discount | A price reduction offered by the seller to trade channel members who perform certain functions such as selling, storing, and record keeping | |
| Seasonal discounts | Discounts granted to early or offseason buyers of products that have peak selling periods | |
| Allowance | Promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer’s products in some way | |
| Segmented pricing | Selling a product or service at two or more prices, where the difference in prices is not based on differences in costs | |
| Psychological pricing | A pricing approach that considers the psychology of prices and not simply the economics; the price is used to say something about the product | |
| Reference prices | Prices that buyers carry in their minds and refer to when they look at a given product | |
| Promotional pricing | Pricing that paves the way for a good old-fashioned sale; prices of selected items are lowered in an effort to attract customers | |
| F.O.B. Pricing | F.O.B. stands for “free on board” and is followed by the designation “factory” or “destination” to indicate at what point the buyer assumes treight costs and title to the product | |
| Uniform-delivered pricing | A geographical pricing strategy in which the company charges the same price plus freight to all customers, regardless of their location | |
| Zone pricing | A geographical pricing strategy in which the company sets up two or more zones. All customers within a zone pay the same total price; the more distant the zone, the higher the price | |
| Basing-point pricing | A geographical pricing strategy in which the seller designates some city as a basing point and charges all customers the freight cost from that city to the customer location, regardless of the city from which the goods are actually shipped | |
| Freight-absorption pricing | A geographical pricing strategy in which the seller absorbs all or part of the actual freight charges in order to get the desired business | |
| Geographic pricing | Pricing decisions which account for who takes responsibility for transportation charges-the seller or the buyer | |
| Premiums | Gifts to paying customers; they are generally claimed through the mail by sending the marketer a number of proof-of-purchase labels or box tops | |
| Patronage reward | Cash or other award for the regular use of a certain company’s products or services | |
| Cents-off coupons | Coupons that offer buyers minor price reductions at the point of sale | |
| Premium price differential | The additional money consumers will pay for the augmented product | |
| Promotional discounts | Discounts for encouraging promotion and sales efforts by intermediaries | |
| Bonus packs | Special packaging that provides consumers with extra quantity of merchandise at no extra charge over the regular price | |
| Prestige pricing | When the seller internationally sets prices at levels high enough to connote an image of quality status | |
| Multiple-unit pricing | A form of promotional pricing where the product is priced for more than one unit, such “as two for one” sale | |
| Predatory pricing | The practice by which large firms set extremely low prices in an effort to undercut small competitors and drive them out of business | |
| Price discrimination | Selling the same product to different customers for different price | |
| Non-cumulative quantity discounts | Price concessions based on quantity ordered on each individual sale | |
| Odd-even pricing | The practice which assumes that consumers will perceive prices such as $9.95 as being “$9 and something” rather than as “almost $10”. | |
| Cost-plus pricing | A strategy that assumes a basic cost per unit and then adds a mark-up to provide a margin that covers overhead costs and returns a profit | |
| Cost/volume/profit analysis | An approach which calculates the effect on profits of different prices, given different levels of demand in response to those prices | |
| Price-off promotions | A strategy that involves temporary price reductions to retailers with the intent that savings will be passed along to consumers | |
| Non-price competition | When firm’s strategy is advanced by components of the marketing mix other than price: the product itself, the distribution system, or the promotional campaign | |
| Push money | Special bonuses paid by a marketer to an intermediary’s sales force | |
| Quantity discounts | Price concessions that are based either on number of units purchased or on the total dollar amount; they are used to encourage larger orders from a single buyer | |
| Rebates | A promotional method which provides for financial returns to buyers from the manufacturer after the purchase has taken place | |
| Cash refund offer (rebate) | Offer to refund part of the purchase price of a product to consumers who send a “proof of purchase” to the manufacturer | |
| Price pack (cents-off deal) | Reduced price that is marked by the producer directly on the label or package | |
| Self-liquidator | The consumer must pay a small charge for the premium to help cover the marketer’’ expenses; if this charge completely covers a marketer’’ costs, the premium is called a self-liquidator |