Definition
Price is the formal ratio that indicates the quantity of money, goods or services needed to acquire a given quantity of goods or services – the amount a customer must pay to acquire a product. [1]
price tags on retail shelving display
Along with product, place, and promotion, price is one of the 4Ps of the marketing mix. [2]
Basing-point pricing is a variation of delivered pricing. The delivered price is the product‘s list price plus transportation from a basing point to the buyer. The basing point is a city where the product is produced; however, in basing-point pricing, the product may be shipped from a city other than the basing point. [1]
In a multiple basing-point pricing system, several locations are designated as basing points. The choice of a basing point is the point that yields the lowest delivered cost to the buyer. [1]
Billed cost is the price appearing on a vendor‘s bill before deducting cash discounts, but after deducting any trade discounts and quantity discounts from the list price. [1]
Delivered price is a quoted or invoice price that includes delivery costs to the FOB point, the latter being a freight terminal, warehouse, or another location commonly accepted in the particular trade or specifically agreed upon between buyer and seller. [1]
Delivery duty paid is a contract under which the seller undertakes to deliver the goods to the buyer at the place he or she names in the country of import with all costs, including duties, paid. The seller is responsible under this contract for getting the import license if one is required.
Invoice price is specified on the invoice for a product. This price will typically be stated net of some discounts and allowances, such as dealer, competitive, and order size discounts, but will not reflect other discounts and allowances, such as those for special terms and cooperative advertising. Therefore, the invoice price will typically be less than the list price but greater than the net price. [3]
Landed cost price is the quoted or invoiced price of a commodity, plus any inbound transportation charges. [1]
List price or manufacturer suggested retail price (MSRP) refers to the price the manufacturer offers to the customer. The manufacturer considers various factors and sets this price. The main purpose of this price is to set a standardized rate for products and services at various locations. [4]
Net price (or pocket price) is the value at which a product is sold after all taxes and other costs are added and all discounts subtracted. Net price is what a customer pays. [4]
Parallel pricing is the practice of following the pricing practices of other organizations, particularly competitors. [1]
Price threshold refers to the lowest or highest price that customers are willing to pay for a particular good or service. [1]
See Also
Discount
Price discrimination
Price premium
Price per statistical unit
References
- American Marketing Association, AMA Dictionary.
- Govoni, N.A. Dictionary of Marketing Communications, Sage Publications. (2004)
- Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeifer; & David Reibstein (2010). Marketing Metrics: The Definitive Guide to Measuring Marketing Performance (Second Edition). Upper Saddle River, New Jersey: Pearson Education, Inc.
- Wall Street Mojo, List Price – Meaning, Formula, Manufacturer Suggested Retail Price, wallstreetmojo.com/list-price/.