CH+17+Price+Concepts

Dennis harpreet clayton schroeder Rachel (goingunknown) i am known now but wu ev'

Measurement of responsiveness to purchasers and suppliers to price change Demand Availability of substitutes Number of buyers perception: necessity or luxury
 * What are the determinants/characteristics of elasticity? Define elasticity.**
 * Elasticity**
 * determinants/characteristics**

Total fixed cost/Per-unit Contribution to fixed Cost Value pricing emphasizes the benefits of a product provides in comparison to the pries and quality levels of competing offerings. The modified break even concept combines the traditional breakeven analysis with an evaluation of consumer demand. It directly address the key question of whether consumers will actually purchases the product at different prices and in what quantities Value pricing emphasizes the benefits of a product provides in comparison to the pries and quality levels of competing offerings. Yield management strategies are designed to maximize revenues in situations in which costs are fixed airfares auto rentals and theater tickets. Pricing that includes all of the variable costs in setting the price for a product
 * What is the formula for break even point?**
 * What is value pricing?**
 * Define modified break even analysis. Give an example.**
 * What is value pricing?**
 * What is the goal of yield management?**
 * What is full cost pricing?**

ch 17 clayton Legal constraint on pricing decisions, the competition act 1986 is the major legislation in Canada that governs pricing and other competitive business practices. The act balances the interest of business and consumers, tries to foster fair and competitive environment to protect businesses from eachother, and protect customers from unfair business practices. Major categories of pricing objectives 1- Profitability 2- Volume 3- Meeting competition 4- Prestige Elasticity is the consumers response to change in price, eg. if price goes up on a product and people stop buying it, it has low elasticity. If price goes up and people continue to buy product, it has a high elasticity. Elasticity has 4 determinants 1- Availability of substitute 2- Classified as luxury or necessity 3- Portion of budget spent on item 4- Time Break even point(in units)=total fixed cost/per-unit contribution to fixed cost Break even point(in dollars)=total fixed cost/(1 – variable cost unit price) To include target returns Break even point(including specific dollar target return) = (total fixed cost + profit objective)/Per unit contribution. Break even analysis is easily understood by managers and can help them see if their goals are reachable or need to be adjusted. Modified break even analysis uses the traditional BE analysis with the consumer demand, directly addresses the key question of whether consumers will actually purchase the product at different prices and what quantities. Yield management is a pricing strategy used to maximize revenue in situations when costs are fixed.