Presentation on theme: "Factors Affecting Price. Lesson Objectives What are the factors that affect the selling price of a product? What are legal and ethical considerations."— Presentation transcript:
Price Fixing Competitors agree on certain price ranges within which they set their own prices. Collusion – communication among competitors to establish a fixed price Made illegal by the Sherman Antitrust Act of 1890 because it eliminates competition
Price Discrimination Company charges different prices to similar customers in similar situations Made illegal by the Clayton Antitrust Act of 1914 because it creates unfair competition. Strengthened by the Robinson-Patman Act of 1936
Resale Price Maintenance Resulted in the establishment of the “Manufacturer’s Suggested Retail Price” (MSRP) Disallows manufacturers from forcing retailers to charge a specific retail price
Minimum Price Laws Enacted in some states to disallow retailers from selling below cost Where allowed, items priced at cost are called loss leaders. Purpose is to attract customers in hopes they will buy other items.
Unit Pricing Allows consumers to compare similar goods packaged in various sizes or forms by using a standard unit of measure
Price Advertising Laws established by Federal Trade Commission (FTC) Bait-and-switch illegal
Review What are some of the factors that affect pricing? What are some of the government regulations that affect pricing?