mkt 327 ch12

Profit equation

Profit=Total Revenue - Total Cost; or Profit= (Unit price x Quantity sold) - (Fixed cost + Variable cost)

Break-even analysis

a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output

Pricing constraints

factors that limit the range of prices a firm may set

price (P)

the money or other considerations (including other products and services) exchanged for the ownership or use of a product or service

demand curve

a graph relating the quantity sold and the price, which shows the maximum number of units that will be sold at a given price

Pricing objectives

expectations that specify the role of price in an organization's marketing and strategic plans

price elasticity of demand

the percentage change in quantity demanded relative to a percentage change in price

Value

the ratio of perceived benefits to price; or Value = (Perceived benefits ÷ Price)

Total cost (TC)

the total expenses incurred by a firm in producing and marketing a product: total cost is the sum of fixed costs and variable costs

Total revenue (TR)

the total money received from the sale of a product; the unit price of a product multiplied by the quantity sold