Pricing + Discrimination

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9 Terms

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How to set a price

1. Cost-Oriented Pricing

2. Break Even Analysis

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Cost-Oriented Pricing

Step 1: Determine selling price

Seller’s costs+profit

Step 2: Determine markup percentage

(markup/sales price)(100)

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Breakeven Point

when total revenue equals total costs

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Breakeven Analysis

breakeven point=fixed costs/(selling price per unit-variable costs per unit)

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mixed costs

some fixed (base costs) some increasing with use

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step costs

fixed to a limit then increases

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time frame

Fixed in the short run can become variable in the long run

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goals of pricing

maximize profit and market share

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illegal price discrimination

Price fixing, predatory pricing, discrimination based on protected characteristics, price gouging