Ba 355 Lesson 13

the money or other considerations

(including other products/ services)

exchanged for the ownership or use of a product or service

what all consumers want

Price x Quantity

measure is in $

Fixed Cost + Variable Cost* quantity sold

Costs that do not vary with volume-rent

costs that vary with volume -package material

1. identify pricing objectives and constraints

objectives like profit, market share, and survival

constraints like demand for product class and brand newness and cost

profit

sales revenue

unit volume

market share

firm $ sales/ category sales

•Chobani has $40M sales and the yogurt category is $100M in sales: Chobani has $ market share of 40%

-demand

-cost

-competitors

--consumer demand for the products or service

--cost of producing and marketing the product

--type of competitive market (monopoly, oligopoly, pure monopoly, pure competition)

Estimate demand and revenue

Revenue (TR) = Unit Price (P) times Quantity Sold (Q)

when a 1% decrease in price produces more than a 1% increase in quantity demanded

increase in the price=increase in demand

relates quantity sold to price

when a 1% decrease in price produces less than a 1% increase in quantity demand

you raise the price, but it is still a necessity

determine cost, volume and profit

cost estimation

marginal analysis in relation to profit

break even analysis in relation to profit

breakeven point--unit quantity at which total revenue and total cost are equal

select an appropriate price level

set list or quoted price

make special adjustments to list or quoted price

MILTON HERSHEY’S LARGEST BUSINESS CONTRIBUTION WAS TO MAKE CHOCOLATE A GREAT VALUE!

unit quantity at which Total Revenue and Total Cost (fixed plus variable) are equal