ACC2200 Study Guide - Final Guide: Resale Price Maintenance, Predatory Pricing, Profit Margin

• School: Monash University
• Department: Business - Accounting
• Course: ACC2200
• Professor: Prabanga Thoradeniya

Document Summary

Week 8 - pricing & product mix decisions. Exclude ch 20 appendix, include ch 7 appendix. Effective price setting requires knowledge of market conditions (competitors and customer demands) and cost awareness. It is costs more than they are willing to pay, they won"t buy the product. Price must be between customer value and product cost. Other factors need to be considered when setting the price. Major influences on pricing decisions: product costs. Price must exceed product cost to gain a profit in the long term. The importance of product costs in price setting differs across industries (eg. budget airlines aim to reduce costs to reduce their ticket prices. Luxury airlines consider their reputation and quality when deciding costs and prices: customer value. Diff b/w the value to the customer & what they pay = net value to the customer. Understanding customer value is important in both price setting & product creation.