Pricing Decisions

Abstract

When you have finished working through this chapter you should be able to

• Discuss the short-term and long-term aspects of pricing decisions

• Appreciate the importance of corporate strategy for pricing decisions

• Contrast and compare the implications of a market penetration and a skimming approach for pricing of new products

• Understand the relationship between costing and pricing

• Define the term full cost (or cost-plus) pricing

• Identify the main strengths and limitations of cost-plus pricing

• Define the term marginal costing

• Define the term marginal cost pricing

• Differentiate between situations in which a cost-plus approach to pricing is appropriate and those in which a marginal cost approach is needed