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Pricing ed F 09 - Pricing Ed Sp 08 What is price Everything...

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Pricing – Ed Sp 08 What is price? – Everything we give up to get something Tuition Rent Interest Insurance premium Dues Fare Commission Wage Salary Why so many names? Prices are usually in cash but sometimes not Examples of non-cash prices ? Prices are set by sellers Pricing is usually not developed for an individual item, it’s part of a company’s strategy for the entire company or the product line. The fundamental determinants of price are cost to the seller and demand .
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Cost : Total cost Average Cost Marginal Cost Fixed Cost Variable cost Demand : How much will people buy at a given price. Assumption is that if we lower price people will buy more. The question is: how much more? The answer: The demand curve Which can be: Elastic Inelastic Unitary Fixed What are factors that influence elasticity? Urgency Availability of substitutes Price relative to purchasing power Product durability
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Products other uses Time frame Note there is also a supply curve Discuss equilibrium point where supply curve crosses demand curve. Problem is that they operate along different time scales. Pricing objectives? First objective is the survival of the firm Profit maximization – seems obvious but not always easy to do.
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