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Chapter 5

Pricing

Outcome

By the end of this session you should be able to:

 explain the factors that influence the pricing of a product or service

 define and explain the price elasticity of demand

 derive and manipulate a straight-line demand equation; an equation for the total
cost function excluding or including volume-based discounts

 advise on whether or not to increase production and sales levels considering
incremental costs, incremental revenues and other factors

 explain, using a simple example, all forms of cost-plus pricing strategy

 calculate, for given data, a price using a cost-plus strategy

 explain different pricing strategies

 identify suitable pricing strategies for given situations from skimming,
penetration, complementary product, product-line, volume discounting

 explain, using a simple example, a price-discrimination pricing strategy, a
relevant-cost pricing strategy

 calculate, for given data, a price using a relevant cost strategy

and answer questions relating to these areas.

The underpinning detail for this Chapter in your Integrated Workbook can

be found in Chapter 5 of your Study Text

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