ObjectivesSettingthePriceAdaptingthePriceInitiating&RespondingtoPriceChangesTypesofCostsTotalCostsSumoftheFixedandVariableCostsforaGivenLevelofProductionFixedCosts(Overhead)Coststhatdon’tvarywithsalesorproductionlevels.ExecutiveSalariesRentVariableCostsCoststhatdovarydirectlywiththelevelofproduction.RawmaterialsPricingMethodsMarkupPricingTargetReturnPricingPerceivedValuePricingValuePricingGoing-RatePricingSealed-BidPricingSomeimportantpricingdefinitionsUtility:TheattributethatmakesitcapableofwantsatisfactionValue:TheworthintermsofotherproductsPrice:Themonetarymediumofexchange.ValueExample:CaterpillarTractoris$100,000vs.Market$90,000$90,000ifequal7,000extradurable6,000reliability5,000service2,000warranty$110,000inbenefits-$10,000discount!PsychologicalPricingMostAttractive?BetterValue?Psychologicalreasontopricethisway?A32oz.$2.19B26oz.$1.99AssumeEqualQualityDiscriminatoryPricingTimeProduct-formCustomerSegmentLocation