# Answers Chapter 10 - a.ii Synonyms Tuition Rent...

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Chapter 10: Pricing Study Questions 1. Do problems 1 and 2 under “Marketing By the Numbers” on page 308 of the textbook. a. Problem 1 asks for two price calculations; each is labeled a “markup”, but they are based on selling prices so according to the class terminology, both are margin calculations (Margin = (Price-Variable Cost)/Price. As such: a.i. \$150 – \$150*.4 = \$150 - \$60 = \$90 a.ii. \$90 – \$90*.15 = \$76.50. b. Problem 2 is a break-even (BE = Fixed Costs / (Unit Price – Unit Variable Costs). As such: b.i. \$200,000 / (\$76.50 - \$40) = \$200,000 / \$36.50 = 5,480 (round up on BE) . b.ii. To solve the section question, we can think of the \$800,000 profit as additional fixed costs b.ii.1. (\$200,000 + \$800,000) / \$36.50 = 27,398 (always round up on BE) . 2. Answer Questions 1 and 2 under “Discussing and Applying the Concepts” on page 307 in the textbook. a. Question 1 a.i. price = the sum of all values a customer exchanges for the benefits of using a product or service

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Unformatted text preview: a.ii. Synonyms: Tuition, Rent, Subscription Fee, Registration Fee, Tax, Tariff, Salary, Wage, Charge, Duty, Toll, Levy, Tithe, etc. b. Question 2 b.i. Value-based pricing prices based on customer perceptions of value b.ii. Cost-based pricing prices based on the costs associated with creating and marketing the product or service plus some rate of return. 3. Review the influencers of price sensitivity and consider how you might decrease price sensitivity for the product in your marketing plan. 4. Know the Strategic Price Gap model: a. What allows a marketer to raise prices? a.i. raising perceived value through marketing efforts b. What drives prices down? b.i. competition c. What is the “floor”? c.i. costs of goods sold d. What is the “ceiling”? Is there more than one ceiling? Explain. d.i. the ceiling is perceived value, but this ceiling can theoretically be raised to the objective value....
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Answers Chapter 10 - a.ii Synonyms Tuition Rent...

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