COMMERCE 2MA3 Chapter Notes - Chapter 11: Profit Margin, Marketing, Variable Cost
10 Dec 2018
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Sales = no. units sold * selling price (revenue: revenues are not profits, profits = revenues - costs. Profit margin: is a profitability indicator used to assess how much of our revenues are profits. It is the percentage of our profits from out revenues. Capital (investments) = the amount of money you invested in the business. Roi: is a ratio that shows how much profits do we generate for each dollar of capitsl, profits / investment. Profit orientation focusing on target profit pricing, maximizing profits, or target return pricing: firms usually implement target profit pricing when they have a particular profit goal as their overriding concern. Companies with a profit orientation can follow these pricing strategies: target profit pricing. We want 30% profit margin, demand is expected at 100 units, cost per unit is 300, how much should the price be to reach our desired level of profit.
