Download ENT 5.02

Objective 5.02 Content Outline
Knowledge/Skill
Understands concepts and strategies utilized in determining and adjusting prices to maximize return
and meet customers’ perceptions of value
Performance Indicators
Determine cost of product (break-even, ROI, markup) (PI:019)
Calculate break-even point (PI:006, PI LAP 4)
Set prices (PI:007)
Objectives
1. Define the following terms: break-even, ROI, and markup.
2. Explain the role of break-even in determining the cost of product.
3. Describe the use of ROI in determining the cost of a product.
4. Discuss the use of markup in determining the cost of a product.
5. Explain factors to consider in determining the cost of a product.
6. Demonstrate procedures for determining the cost of a product.
7. Identify examples of fixed expenses.
8. List examples of variable expenses.
9. Cite examples of mixed/semi-variable expenses.
10. Explain the importance of break-even in setting prices.
11. Calculate the break-even point for a product in units.
12. Calculate the break-even point for a product in dollars.
13. Define the following terms: floors, ceilings, and elasticity.
14. Describe the importance of determining pricing floors and ceilings.
15. Explain process for setting prices.
16. Estimate demand for product.
17. Implement process for setting prices.
Resource/Textbook
Allen, K.R. & Meyer, E.C. (2006). Entrepreneurship and small business management (pp. 241-247, 230,
234-247. 459). Woodland Hills, CA: McGraw-Hill/Glencoe.
Software/Online
Accounting for Management. (2011). Absorption costing approach to pricing. Retrieved April 18, 2011,
from http://www.accountingformanagement.com/absorption_costing_approach_cost _plus_pricing.htm
Bizpep Group. (n.d.). Pricing and breakeven analysis. Retrieved April 18, 2011, form
http://www.bizpeponline.com/PricingBreakeven.html
eHow.com. (2011, February 9). How to calculate a price markup. Retrieved April 18, 2011, from
http://www.ehow.com/how_2027243_calculate-price-markup.html
eXtension. (2007, January 19). How do I determine a price four my product? Retrieved April 18, 2011,
from http://www.extension.org/pages/36693/how-do- i-determine-a-price-for-my-productc
NetMBA.com. (2002-2010). Pricing strategy. Retrieved April 18, 2011, from
http://www.netmba.com/marketing/pricing/
Schmidt, M.J. (2011). Return on investment: What is roi analysis? Retrieved April 18, 2011, from
http://www.solutionmatrix.com/return-on-investment.html
Ward, S. (2011). Breakeven analysis. Retrieved April 18, 2011, from
http://sbinfocanada.about.com/cs/startup/g/breakevenanal.htm
AccountingCoach. (20004-2011). Break-even point. Retrieved April 19, 2011, from
http://www.accountingcoach.com/online-accounting-course/01Xpg03.html
Accounting for Management. (2011). Mixed cost or semi-variable cost. Retrieved April 18, 2011, from
http://www.accountingformanagement.com/mixed_costs.htm
Accounting for Management. (2011). Traceable and common fixed costs. Retrieved April 18, 2011, from
http://www.accountingformanagement.com/traceable_common_fixed_costs.ht m
eHow.com (1999-2011). How to calculate a breakeven point in units. Retrieved April 18, 2011, from
http://www.ehow.com/how_2363740_calculate-breakeven- point-units.html
Elmblad, S. (n.d.). Fixed expense. Retrieved April 18, 2011, from
http://financialsoft.about.com/od/glossaryindexf/g/FixedExpns_def.htm
Marketing Education Resource Center (2007). Tipping Point (Calculate Break-even) [LAP: PI-004:
Presentation Software]. Columbus, OH: Author.
Richards, D. (n.d.). How to do a breakeven analysis. Retrieved April 18, 2011, from
http://entrepreneurs.about.com/od/businessplan/a/breakeven.htm
SmallBusinessNotes.com. (n.d.). Calculating break-even revenue. Retrieved April 19, 2011, from
http://www.smallbusinessnotes.com/marketing-your- business/calculating-break-even-revenue.html
The starting point: Calculating break-even. (n.d.). Retrieved April 18, 2011, from
http://www.education.ne.gov/BMIT/Curriculum/Pricing_Calculating_Break_Eve n_Points.pdf
tutor2u.com. (n.d.). Breakeven. Retrieved April 19, 2011, from
http://tutor2u.net/business/gcse/finance_breakeven.htm
Berry, T. (2006, January 1). Determining a plan for setting prices. Retrieved April 19, 2011, from
http://www.entrepreneur.com/startingabusiness/businessplans/businessplancoachtimberry/article82730.
html
Business Owner’s Toolkit. (1995-2011). Evaluating your product’s uniqueness. Retrieved April 19, 2011,
from http://www.toolkit.cch.com/text/P03_5240.asp
Business Owner’s Toolkit. (1995-2010). Pricing your product. Retrieved October 8, 2010, from
http://www.toolkit.com/small_business_guide/sbg.aspx?nid=P03_5200
Business Owner’s Toolkit. (1995-2011). Researching product price elasticity. Retrieved April 19, 2011,
from http://www.toolkit.cch.com/text/P03_5230.asp
Ennico, C. (2003, June 1). Set the right price for your service. Retrieved April 19, 2011, from
http://www.entrepreneur.com/money/moneymanagement/pricing/article62382.html
Fishman, S. (2011). How much should you charge for your services? Retrieved April 19, 2011, from
http://www.nolo.com/legal-encyclopedia/article-30158.html
Gingerich, S. (n.d.). Setting prices for services. Retrieved April 19, 2011, from
http://www.yebdc.ab.ca/pdf%20files%20for%20download/sueart/sue55.pdf
Passewitz, G.R. (n.d.). Pricing. Retrieved April 19, 2011, from http://ohioline.osu.edu/cdfact/1326.html
Pricing. (2004, Spring). Retrieved April 19, 2011, from
http://www.slu.edu/Documents/business/eweb/Pricing_Slides.pdf
Small Business Notes. (2010). Pricing a product or service. Retrieved April 19, 2011, from
http://www.smallbusinessnotes.com/operating/marketing/pricing.html