RSM100Y1 Chapter 17: Part 4 Chapter 17
Document Summary
Pricing deciding what the company will receive in exchange for its product. Pricing objectives goals that producers hope to attain in pricing products for sale. Others try to achieve high market share. If prices are set too low, company will sell many units but may miss opportunity to make additional profit on each unit, lose money on each exchange. If set too high, company will make large profit but sell fewer units, excess inventory and need to reduce production operations, loses money. Strategy of charging prices based on market conditions. Firms calculate profits by comparing revenues against costs for materials and labour to create the product. Also consider capital resources, cost of marketing. Many firms set prices to achieve a targeted level of return on sales or capital investment. Set low prices for new products to get buyers to try products. Trying to establish market share a company"s percentage of total market sales for a specific product.
