MGTA02H3 Lecture Notes - Rolex, Pricing Strategies, Variable Cost
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MGTA02H3 Full Course Notes
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Price: deciding what the company will receive in exchange for its product, customers won"t buy your product. Setting price: begin with cost, you must charge to make a profit. Markup: what the business adds to cost of goods sold to arrive at its price. Pricing strategies: size of markup is policy decision, skimming & penetration . Skimming strategy: set very high price, you don"t need to sale many product, large profits from each sale, ex, rolls-royce cars, rolex watches. Penetration strategy: set low price (small markup, the sales volume needs to be large, small profit from each sale, ex, honda civic cars, casio watches, problem: which pricing strategy to use; to help answer: break-even analysis . If i chose this price, how many units do i have to sell to make a profit? : two kinds of costs, variable cost. Those costs that change with the number of goods or services produced or sold.
