| competitive bidding | A situation where two or more companies submit bids (prices) for a product, service, or project to a potential buyer.
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| cost-plus pricing | A pricing approach in which the price is equal to cost plus a markup.
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| cross-elasticity | The extent to which a change in a product's price affects the demand for substitute products.
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| demand curve | A graph of the relationship between sales price and the quantity of units sold.
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| marginal cost curve | A graph of the relationship between the change in total cost and the quantity produced and sold.
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| marginal revenue curve | A graph of the relationship between the change in total revenue and the quantity sold.
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| oligopolistic market (or oligopoly) | A market with a small number of sellers competing among themselves.
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| penetration pricing | Setting a low initial price for a new product in order to penetrate the market deeply and gain a large and broad market share.
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| predatory pricing | An illegal practice in which the price of a product is set low temporarily to broaden demand. Then the product's supply is restricted and the price is raised.
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| price discrimination | The illegal practice of quoting different prices for the same product or service to different buyers, when the price differences are not justified by cost differences.
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| price elasticity | The impact of price changes on sales volume.
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| price takers | Firms whose products or services are determined totally by the market.
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| return-on-investment pricing | A cost-plus pricing method in which the markup is determined by the amount necessary for the company to earn a target rate of return on investment.
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| skimming pricing | Setting a high initial price for a new product in order to reap short-run profits. Over time, the price is reduced gradually.
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| target cost | The projected long-run product cost that will enable a firm to enter and remain in the market for the product and compete successfully with the firm's competitors.
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| target costing | The design of a product, and the processes used to produce it, so that ultimately the product can be manufactured at a cost that will enable a firm to make a profit when the product is sold at an estimated market-driven price. This estimated price is called the target price, the desired profit margin is called the target profit, and the cost at which the product must be manufactured is called the target cost.
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| time and material pricing | A cost-plus pricing approach that includes components for labor cost and material cost, plus markups on either or both of these cost components.
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| total cost curve | Graphs the relationship between total cost and total quantity produced and sold.
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| total revenue curve | Graphs the relationship between total sales revenue and quantity sold.
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| value engineering (or value analysis) | A cost-reduction and process improvement technique that utilizes information collected about a product's design and production processes and then examines various attributes of the design and processes to identify candidates for improvement efforts.
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