Information about the company has been attached below use this to answer the questions below
1. List all the costs you are likely to incur in making or marketing your product.
2. Refer forward to section 2 and then calculate the fixed and variable costs associated
with your product.
3. Using the costs as calculated above and your profit objective, calculate the optimal price you
should charge.
4. What price do your competitors charge?
5. Compared with your product/service how much better/worse are those of your competitors?
6. Are any of your possible market segments less price-sensitive than others?
7. Does your answer to question 6 lead you to believe that there is an opportunity to sell at
different prices in each market segment – and so enhancing profits?
Section 2
1. Construct a break-even analysis for year 1 of your business from the figures calculated in the
last three chapters.
2. Estimate the effect of the following events on your break-even point for each year:
a. a 10 per cent rise/fall in sales volume;
b. a 10 per cent rise/fall in unit selling price;
c. a 10 per cent rise/fall in variable costs per unit of sale, eg a meal;
d. a 10 per cent rise/fall in fixed costs;
e. a requirement for achieving your profit objective by year 1 – now what ‘volume’ of
the product must you sell to break even?
3. Look back to section 1 on Pricing, and review your proposed selling price in the light of
work/research carried out during this assignment.
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Use the information about the company connected below to answer the questions below.
1. Compile a list of all the expenses you expect to incur while developing or promoting your product.
2. Return to section 2 and compute the fixed and variable costs associated with it.
in relation to your product
3. Using the costs determined above and your profit goal, determine the best price you can pay.
should be charged
4. What are your competitors’ prices?
5. How much better/worse are your competitors’ products/services in comparison to yours?
6. Do any of your potential market segments have a lower price sensitivity than others?
7. Does your response to question 6 lead you to conclude that there is a chance to sell at a higher price?
different prices in each market segment – and
