1. Makes Cents Scott Barnes Nikita Brown Casey Browning Brittney Jones

2. Definitions Selling price – the amount a seller charges for a good or service Mark-up – the difference between the cost of a product and its selling price Sales-oriented pricing objectives – increases the total amount of income from sales Maximization – objective of a firm to make the most possible immediate profit Cash flow – the amount of money coming and going out of the business Target return – amount of money businesses want to earn on their sales

3. Definitions cont. Total cost – fixed and variable cost Fixed cost – costs that are not affected by changes in sales volume Variable costs – cost that change according to changes in sales volume Business cycles – ups and downs in economic activity Pure competitive market – when markets have very little control over pricing

4. Cont. Market price – controlled by supply and demand there are relatively Oligopolistic market - few sellers, and the industry leader usually determines prices. Pure Monopoly- there is only one seller or provider of a product, and no substitutes are readily available Price Fixing- agreeing on a price or price range for a product. Bait-and-Switch advertising-promoting a low-priced item to attract customers to whom they then try to sell a higher priced item.

5. continued Unit Pricing- the price per unit (ounce, pound, etc.) along with the total price of the item.

6. The Power of Price People often think of selling price as the dollar figure shown on a price tag. However, there are many other kinds of selling prices, such as: Membership dues College tuition Legal fees Insurance premiums Bus fare

7. The Power of Price Some people think that a business gets to keep all the money that a customer pays for a product. From the selling price, the business must Pay all the costs of the product. Pay all of its operating expenses. Obtain a profit for the business.

8. Price It Right The purpose of sales-oriented pricing objectives is to increase the total amount of income from sales. There are two ways a business can do this. One way is to charge low prices in an effort to increase sales volume. The other is for the business to charge high prices in an effort to increase the dollar value of its sales.

9. Price It Right Some specific objectives a business might achieve by using sales-oriented pricing include: Creating an image for the business. Being more competitive. Obtaining, maintaining, or increasing market share.

10. Price It Right Profit-oriented pricing objectives focus on creating profits for the business. Some businesses choose prices that will result in the greatest possible amount of profit, but most businesses simply want to recover their costs and earn a reasonable amount of profit.

11. Price It Right Some of the objectives a business might achieve through profit-oriented pricing include: Surviving Maximizing profits. Earning a return on investment. Earning a return on sales.

12. Pick a Price Knowing the total costs of a product is very important in setting selling prices because the business needs to recover those costs. Total costs are made up of two kinds of costs—fixed and variable. Fixed costs are costs that are not affected by changes in sales volume. Variable costs are costs that change according to changes in sales volume.

13. Pick a Price Supply and demand are determined not only by what people want but by what they can afford to buy. When consumer demand for a product increases, producers make more of it, the supply increases, and the selling price goes down. As the supply increases, the number of buyers may decrease, and sellers will have to reduce the price of a product to get it off the shelves.

14. Pick a Price Marketers monitor business cycles and try to predict whether business conditions will get better or worse. This helps them to adjust their pricing according to the changes in the economy. In times of economic growth, both individuals and businesses increase their spending, which increases demand. When demand is higher than producers can meet, prices go up

15. Pick a Price The kind of market in which the business operates determines what kind of pricing will help the business to be more competitive. Each one affects pricing in a different way: Pure competition. Monopolistic competition. Oligopoly. Monopoly

16. Pick a Price There are both state and federal laws that affect pricing. The major purposes of government regulation of pricing are to promote competition and to prevent monopolies. Some of the pricing areas regulated by law are: Price fixing, Price discrimination, Price advertising, Unit pricing.

17. Pick a Price No two companies have the same set of objectives and strategies, but there are several common factors that affect pricing, including: Product mix. Product life cycle. Target market.