Download Price - jaymetracy

Bell Ringer
• Advertising a great price and then not having
the merchandise available for consumers to
purchase is part of which practice?
Bell Ringer Answer
• Bait and Switch.
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Pre-ACT Make-Up
Go to the theatre AFTER morning
announcements.
Chris Buckner
Brandon Fox
Lawrence Junior
Zachary McMillen
Chris Warner
Morgan Wooden
Agenda
• Bell Ringer / Attendance – 5 minutes
• Law of Supply and Demand Activity – 10
minutes
• Chapter 9.2 Lecture and Notes – 25 minutes
• Math in Business Activity – 30 minutes
Table of Contents
Topic
Digital Media Trends
Chapter 8.1 Vocabulary and Notes
Recreational Sports
Chapter 8.2 Vocabulary and Notes
Chapter 8 Assessment
Chapter 8.3 and 8.4 Vocabulary
Virtual Business – Lesson 1 Questions
Virtual Business – Lesson 1 Vocabulary
Supply and Demand
Chapter 9.1 Vocabulary and Notes
Marketing Math
Chapter 9.2 Vocabulary and Notes
Page #
4
5
6
7
8
9
10
11
12
13
14
15
Math in Business
Equilibrium Point is at
______________supply/demand
amount and __________ price.
12
Chapter 9.2 Vocabulary
1.
2.
3.
4.
Operating Expenses
Markup
Price Lines
Loss-Leader Pricing
15
Learning Targets
• I can discuss pricing strategies used by
businesses to increase sales.
• I can list five steps for determining price.
Pricing Considerations
• Price – The amount that customers pay for
products and services.
• Pricing – The process of establishing and
communicating the value of goods and
services to customers.
WHEN DETERMINING THE PRICE TO BE
CHARGED, YOU MUST TAKE INTO
CONSIDERATION THE COST OF THE
MERCHANDISE OPERATING EXPENSES,
AND THE DESIRED AMOUNT OF PROFIT.
Pricing Consideration
• Operating Expenses  all of the costs
associated with running your business.
– Utilities, salaries, taxes.
• Markup  the amount that is added to the
cost of an item for sale to cover operating
expenses and allow for a profit.
Pricing Policies
• One-Price Policy – all customers pay the same
price for a product.
• Flexible Pricing Policy – customers negotiate
prices within a range.
• Geographic Pricing – allows pricing variations
based upon geographic location,
– Distribution costs, local competition, local taxes.
Pricing Policies
• Price Lines  distinct categories of
merchandise based upon price, quality, and
features.
– Ralph Lauren has Polo as its high-end price line
and Chaps as the next best alternative at a lower
price.
Pricing Strategies
• Psychological Pricing –
creating an illusion for
customers.
• Example:
– Odd-even pricing
• A DVD that is $29.98 is
seen as being
considerably less
expensive than a $30
DVD.
Pricing Strategies
• Prestige Pricing – when
retailers charge higherthan-average prices for
merchandise and target
customers seeking
status and high quality.
Pricing Strategies
• Volume Pricing – stores
like Wal-Mart receive
merchandise at a lower
cost from its suppliers,
so they are able to pass
those savings along to
the customer.
Pricing Strategies
• Promotions – to get
more customers in the
sale, retailers may use
promotions.
• Loss-leader pricing 
the willingness to take
a loss on the reduced
prices of selected items
in order to create more
customer traffic.
Pricing Strategies
• Quantity Discounts –
customers receive a
financial benefit for
buying a larger quantity.
Pricing Strategies
• Trade-In Allowances –
customers may be given
an allowance for old
merchandise when
making a new purchase.
5 Steps to Determining the Price
1. Establish Price Objectives
1. Percentage of profit you want to earn.
2. Determine the cost of the product or service.
1. Retail price must cover the total cost and allow
for a profit.
3. Estimate the consumer demand.
4. Study the competition.
5. Decide on a pricing strategy.
Marketing Math Problems
1. A computer software retailer used a markup
rate of 40%. Find the selling price of a computer
game that cost the retailer $25.
2. A golf shop pays its wholesaler $40 for a
certain club, and then sells it to a golfer for$75.
What is the markup rate?
3. A shoe store uses a 40% markup on cost. Find
the cost of a pair of shoes that sells for$63.
Marketing Math Answers
1. The markup is 40% of the $25 cost, so the markup is: (0.40)(25) = 10
Then the selling price, being the cost plus markup, is: 25 + 10 = 35
The item sold for $35.
2. 75 – 40 = 35
Find the relative markup over the original price, or the markup rate: ($35) is
(some percent) of ($40), or 35 = (x)(40)...so the relative markup over the
original price is:
35 ÷ 40 = x = 0.875
Since x stands for a percentage, I need to remember to convert this decimal
value to the corresponding percentage.
The markup rate is 87.5%.
3. I will let "x" be the cost. Then the markup, being 40% of the cost, is0.40x.
And the selling price of $63 is the sum of the cost and markup, so:
63 = x + 0.40x
63 = 1x + 0.40x
63 = 1.40x
63 ÷ 1.40 = x= 45
The shoes cost the store $45.