IB DT: Topic 10.5: Economic viability

credits https://docs.google.com/presentation/d/1zikzM-qLPHRciMvxyfUCxUJr5jy6L9lt8J5L3opPME4/present?slide=id.g116938657f7_0_159

why must designers consider the economic viability of their designs?

for them to gain a place in the market

what is the break even point?

the point at which total cost and total revenue are equal, meaning there is no loss or gain for the business. the point at which the costs of production equal the revenue for a product

what is the break even units formula?

what is an assessment of economic viability?

an evaluation of the various economic effects that may result from the implementation of a particular project. this assessment helps decision makers decide if a project is feasible or not

what is a pricing strategy?

the process or methodology that a business uses to set prices for its products and services.

what are the most common pricing strategies?

• value based pricing

• competitive pricing

• price skimming

• cost plus pricing

• penetration pricing

• economy pricing

• dynamic pricing

what is value based pricing?

when you set your pricing based on what consumers think the product is worth

what is competitive pricing?

when you set your prices based on what the competition is charging - often doesn’t leave a lot of room for growth of infant businesses

what is price skimming?

setting your prices as high as the market will possibly tolerate and then lowering them over time

what is cost-plus pricing?

take the product production cost and add a certain percentage to it

what is penetration pricing?

pushing new products by offering prices much lower than competition. may get you customers and decent sale volume, but you need to establish a lot of loyalty before any increases.

what is economy pricing?

pricing a product cheaper than the competition and making the money back with increased volume

what is dynamic pricing?

constantly changing your prices to match the current demand for the item