QMB 3600 Lecture Notes - Lecture 10: Price Skimming, Marginal Revenue, Playstation 4

• School: FAU
• Department: Quantitative Methods in Bus
• Course: QMB 3600
• Professor: Schindlbeck Mary

Document Summary

Pricing the amount of something time, money, or effort that a buyer exchanges: revenue = price x units sold, profits = revenue cost. Objective is to increase profits by increasing revenue or decreasing costs. Increase revenue: sell more products using the 3 other ps, sell unit at higher price. Price setting process: step 1: define price objectives, profit maximization (price skimming) - setting a relatively high price for a period of time after product launches. Usually unique products or prestige like apple, tesla, porsche, benz: volume maximization (penetration pricing) = setting prices low to encourage a greater volume of purchases. Making sure your product is the largest most used: survival pricing maximize cash flow over a short term. Ex: rent, insurance, machines, advertising: variable costs: costs that vary depending on amount of units. Pricing tactics: markup cost-plus pricing marketers add a certain amount to the cost of the product to set the final price.