Escolar Documentos
Profissional Documentos
Cultura Documentos
calculated how?
Price -cost
Example:
price= 100
cost=25
Margin=100-25=75
1. rent
2. salaries
3. other business expenses
Markup
1-(cost/price)
Profit
Margin-fixed costs=profit
Break even analysis is the starting point of setting the actual price
its cost
Variable Costs
Examples:
Fixed Costs
Examples
1. rent
2. insurance
3. salaries
4. utilities
5. administrative costs
All businesses should determine their average fixed costs per day as well as
their average variable costs
Gross Profit=
Gross margin=
1-variable cost %
Break Even=
Fixed costs/margin-Units
Fixed Costs/markuo-Dollars
Examples:
1. Restaurant:
Cost to make $3
Margin $7
Economies of Scale
Usually a lot
Cheaper
Barrier to Entry
Encourage competition
Idle capacity:
Less employees
Diseconomies of Scale
MSRP
Cannot legally be
enforced
1. price
Price Positioning
1. premium
2. supply
2. discount
Consumer Demand
1. rent/mortgage
2. employees
3. advertising
4. inventory
Pricing Strategies
Pricing Strategy
3 pricing Strategies:
1. skimming
2. penetration
3. competitive
Skimming
Capitalize on
Uniqueness
R and D costs
1. calculators-$399
2. vcr-$1500
3. dvd player-$800
4. mp3 player-$600
Price Lining
Super Sizing
Negotiated Pricing
Negotiated Prices
Examples:
1. cars
2. corporate stocks
3. houses
Combo Pricing/Bundling
Psychological Pricing
Return on Investment
1. Tariffs
2. Transportation
3. currency
4. extra charges
Tariffs
Free trade
No tariffs