Page 42 - Business-10

Unit20

Price determination

Smith: We admit that you are right on that point. But we hope that we can be granted a discount
since this is our first business transaction as an exclusive agent. I am sure that your margin of
profit can still accommodate this request. However, I understand your position very well, but
I’ll look into your request.
Yoon: I am just not able to offer a discount on an order for the Electronic Calculator, KE-1788.
That’s just the reality of the situation. I hope that you see my side of things. This kind of re-
quest is something that’s beyond my jurisdiction. However, I can forward your proposal to the
board.
Smith: Well then, what is the most reasonable price that you can accept?
Yoon: According to the local market, we can only afford a 7% off on the Electronic Calculator,
KE- 1788.
Smith: Is that so? Well, I think that’s good enough. Frankly speaking, this is the first time that we
have gotten a discounted 7% off of an invoice amount. That’s OK. We highly appreciate this.
Yoon: Thank you very much too. We hope that this will be a good start of more deals in the
future.

1. What are the factors that you consider in setting the price of your product or
service?

Sample answer:
There are many factors, but the two that greatly affect the price are the resources cost
and marketing. A big part of the profit goes to these two things.

2. Have you ever marked down the price of your product or service? What are
your bases for the markdown.

Sample answer:
Yes, we have done that a lot of times. We usually have a season for marking down
prices. This is done when we have a surplus of supplies which we need to dispose
within a certain time frame. We also need to do this to at least break even. That’s just
one of several possible reasons.

3. How do you keep your prices competitive?

42