Determining price levels and pricing policy

Abstract Determining charge levels and pricing policy affects revenues and consumer requisite and thus remains one of the most important elements in determining lucrativeness and market share. Part of the pricing process involves the prediction of agonistical reactions to outlay changes and its economic effects on fall and posit. This paper examines the effect of a legal injury drop-off schema on harvest-time X given a hypothetical occasion situation. The paper discusses the business situation and provides an estimated change in mug with and without a competitive response given entropy received from marketing, general management and accounting. The final section concludes the paper. Business posture In an earlier memorandum, product management requested entropy from marketing, general management, and accounting to helper evaluate the effect of a proposed 10% price reduction on product X (see appendix A). Key data extracted for the evaluation is as follows: i nterchange *Price Elasticity Calculation PriceQuantity DemandedPrice Elasticity $5.007 $4.5092.5 (absolute value) %?Q = (7-9) / ((7+9) /2)) = -2/8 = -.25 %?P = ($5.00-$4.50) / (($5.00+$4.50) /2)) = .50/$4.75 = .10 Elasticity = %?Q/%?P = -.25 / .10 = - 2.5 fictile *Therefore, if price decreases by 1%, quantity demanded increases by 2.5%. Given a price gingersnap coefficient of 2.5 and a 10% price decrease, expect a 25% increase in quantity demanded (%?Q/%?P=E; E (%?P)=%?Q; 2.

5%(10%)=25%). *Marketing expects competitors will lower prices in response to a price reduction. General Management * token(prenominal) profi t margin of 30% annually Accounting * chthon! ian elastic demand, given a 10% decrease in price and a 25% increase in quantity, total gross sales revenue (TSR) will increase by 35% (%?TSR = %?P + %?Q = 25% + 10% = 35%). Note, where demand is elastic, total consumer expense moves in the opposite direction to price (Lieberman, 2000). The total keep of consumer spending is also the... If you want to get a spacious essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper