Sales of 1000 pa 1500000 Costs of 1000 pa 500000 PROFIT 1000000 Profit

Sales of 1000 pa 1500000 costs of 1000 pa 500000

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Sales of 1000 pa £1,500,000 Costs of 1000 pa £500,000 PROFIT £1,000,000 Profit maximisation: haute couture Cost per dress (1000 prodn) £500 Sales price per dress £1500 Sales of 1000 pa £1,500,000 Costs of 1000 pa £500,000 PROFIT £1,000,000
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Key Pricing Strategies Invest same in another dress business: Market share: contract manufacture Cost per dress (250,000 prodn) £6.00 Sales price per dress £10.0 Sales of 250,000 pa £2,500,000 Costs of 250,000 pa £1,500,000 PROFIT £1,000,000 Market share: contract manufacture Cost per dress (250,000 prodn) £6.00 Sales price per dress £10.0 Sales of 250,000 pa £2,500,000 Costs of 250,000 pa £1,500,000 PROFIT £1,000,000
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4Cs Pricing Considerations P R I C E COST FACTORS COMPETITORS COMPANY CONSIDERATIONS CUSTOMERS ECONOMICS
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4Cs Pricing Considerations P R I C E COST FACTORS COMPETITORS ECONOMICS
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COMPETITOR FACTORS Types of market MONOPOLY: Economics = sole supplier or buyer Can control market and prices due to power... eg oil, diamonds OLIGOPOLY: Limited number of powerful suppliers… within legal def’n above Compete on non-price factors … “going-rate” pricing PRICE FIXING etc: Illegal “ringing” of prices… antiques, haulage, whitegoods etc PERFECT MARKET: Many buyers, many sellers, all with perfect knowledge… so no single one controlling market… commodities, Stock Exchange
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Elasticity … affects ability to compete on price Capacity … over/under supply… eg car industry Dominant suppliers
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