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Business Glossary


Business Definition for: product line pricing
product line pricing

establishing a single price for all products in a product line, such as having a price of $55 for the high-priced line of dress shirts, $45 for the medium-priced line, and $35 for the lowerpriced line. Product line pricing factors in the impact of a product's price on demand for another product offered by that marketer. For example, if McDonald's offered a $12 sandwich, it would be far out of the price/value range established by other sandwiches in McDonald's product line and demand would be minimal. The price of a complementary product such as software can directly impact demand for the hardware. The higher the price of the software, the lower the demand for the hardware. McDonald's could afford to offer a beverage at cost if the incremental sandwich sales revenue gained as a result outweighed the lost beverage revenue. The price of a product such as a compact car can impact demand for another compact car model that would serve as a substitute. The higher the price of one car, the greater the demand for the other. Variations in manufacturing costs across products are also a factor in product line pricing.

Copyright c 2000, 1994, 1987 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.


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