Deck 6: Considerations for Services Pricing

Question 1

When pricing a service, the service provider should consider all of the following except __________.

A) demand considerations
B) cost considerations
C) customer considerations
D) product considerations
E) all the above should be considered

Answer 1

all the above should be considered

Question 2

A consumer's price sensitivity will decrease as:

A) the perceived number of substitutes increase
B) switching costs decrease
C) the shared costs for the expenditure increase
D) the perceived unique value of the service decreases
E) the customer's ability to build an inventory increases

Answer 2

the shared costs for the expenditure increase

Question 3

Brand equity is most similar to:

A) psychic value
B) image value
C) service value
D) product value
E) personnel value

Answer 3

image value

Question 4

If the positive effect of cross-price elasticity in which the increasing price of one service increases the demand for another service are said to be __________.

A) unitary
B) substitutes
C) complementary
D) inelastic
E) elastic

Question 5

The pricing strategy that enhances the firm's relationship with its targeted consumers and is a form of relationship pricing is:

A) activity-based costing
B) price bundling
C) benefit-driven pricing
D) flat-rate pricing
E) efficiency pricing

Question 6

Traditionally, overhead in most service firms has been allocated to projects based on the amount of ____________ charged to complete the customer's requirements.

A) direct labor
B) fixed costs
C) time
D) number of employees
E) number of time sheet entries

Question 7

The approach that allocates overhead to each project based on the activities undertaken to complete the project is called:

A) activity-based costing
B) price bundling
C) benefit-driven pricing
D) flat-rate pricing
E) efficiency pricing

Question 8

Customer frustration resulting from receiving poor service is most similar to:

A) image costs
B) monetary price
C) energy costs
D) psychic costs
E) time costs

Question 9

Like many services, the demand for medical services tends to be __________.

A) inelastic
B) elastic
C) substitute demand
D) complementary demand
E) price cross elastic demand

Question 10

Effective boundary spanners enhance the __________ of services.

A) product value
B) service value
C) image value
D) time value
E) personnel value

Question 11

Costs such as direct labor and sales commissions are called:

A) fixed costs
B) variable costs
C) average costs
D) marginal costs
E) future costs

Question 12

The tasks in activity based costing are thought of as "users" of overhead and identified as:

A) fixed costs
B) cost drivers
C) variable costs
D) project costs
E) cost labor

Question 13

Discuss issues service providers should consider when formulating a pricing strategy.