Business of Retail Ch 4

Front

What is Psychological Pricing?

Back

Psychological Pricing is a pricing strategy where prices are set a few cents below a round number (e.g., $14.97 instead of $15.00) to make the price seem lower and more attractive to consumers.

Front

How do you calculate Net Profit?

Back

Net Profit is calculated by subtracting total expenses from total revenue. For example, if a business has $5100 in revenue and $3400 in expenses, the net profit is $5100 - $3400 = $1700.

Front

What is a Markdown?

Back

A Markdown is a reduction in the selling price of an item to encourage sales. It is often used to clear out inventory.

Front

What does MSRP stand for?

Back

MSRP stands for Manufacturer's Suggested Retail Price, which is the price that manufacturers recommend retailers charge for a product.

Front

Define Revenue in a retail context.

Back

Revenue is the total amount of money received by a retail business from sales before any expenses are deducted.

Front

What is the difference between Markup and Margin?

Back

Markup is the amount added to the cost price of goods to cover overhead and profit, while Margin is the difference between the selling price and the cost price expressed as a percentage of the selling price.

Front

What is Competitive Pricing?

Back

Competitive Pricing is a strategy where a business sets its prices based on the prices of competitors to attract customers.

Front

What are Fixed Costs?

Back

Fixed Costs are expenses that do not change with the level of goods or services produced by the business, such as rent and salaries.

Front

What are Variable Costs?

Back

Variable Costs are expenses that vary directly with the level of production or sales, such as materials and labor.

Front

What is the purpose of a Pricing Strategy?

Back

A Pricing Strategy is designed to maximize profits, attract customers, and compete effectively in the market.