COMM 305 Chapter Notes - Chapter 9: Direct Labor Cost, Fixed Cost, Profit Margin
7 Apr 2017
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Document Summary
Many factors affect the price for a good or service. Looking at the pharmaceutical industry, their approach to profitability is to spend heavily on. R&d in order to find and patent new drugs, price them high, and market them aggressively. For example, due to the aids epidemic in africa, drugs to treat aids were lowered to 600$ per patient in these countered, while americans pay 6,016$ for the same drug. Drug companies argue this higher price as their way of covering financial risks to developing these products. In the long run, a company has to price its product to cover the product"s cost and eventually earn a reasonable profit. To price a product properly, the company has to have a good understanding of the market force at work. In most cases, a company doesn"t set the prices; instead, the price is set by the competitive market (the laws of supply and demand).
