RSM100Y1 Study Guide - Warehouse Club, Chat Room, Walmart
Document Summary
Pricing: managers decide what the company will receive in exchange for its product. Business firms calculate profits by comparing revenues against costs for materials and labour to create the product. Many companies initially set low prices for new products as they are willing to accept minimal profits (even losses) to establish market share a company"s percentage of the total market sales for a specific product. Even with established products, market share may outweigh profits as a pricing objective. During difficult economic times, loss containment and survival may become a company"s main objectives. Managers measure potential impact before deciding on final prices, using: cost oriented pricing: considers the firm"s desire to make a profit and takes into account the need to cover production costs. You must consider other costs such as rent, wages, utilities, etc when determining price and so you will charge a markup price.
