BUSI 2202U Lecture Notes - Lecture 4: Jonas Salk, Walmart, Demand Curve
Document Summary
What is price: price is the money or other consideration (including other goods and services) exchanged for the ownership or use of a good or service, price is used as an indicator of value. Value is based on consumer perceived benefits vs. price: pricing is a critical factor in determining a firm"s profit equation: Profit = total revenue - total cost. Profit = (unit price quantity sold) - total cost. Why do consumers pay for products: because consumers benefit more (functionally/emotionally) than the price they pay. Why do businesses price and sell products: businesses receive more revenue than the cost of producing/procuring the product (profit) Of all the business activities, price, adds directly to the bottom line. Price is net positive for businesses all other activities or decisions are either costs or only add indirectly to the bottom line (promotion, place, product) Bad pricing decisions will directly impact your bottom lime.
