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4. Marginal Analysis Fixed Costs Break-Even Analysis Organizational Objectives Other Inputs to Pricing Decisions Inputs to Pricing Decisions Pricing > Inputs to Pricing Decisions Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/marketing/textbooks/boundless-marketing-textbook/pricing-8/inputs-to-pricing-decisions-60/

5. Free to share, print, make copies and changes. Get yours at www.boundless.com Appendix

6. Key terms break-even point The point where total costs equal total revenue and the organization neither makes a profit nor suffers a loss. demand curve The graph depicting the relationship between the price of a certain commodity and the amount of it that consumers are willing and able to purchase at that given price. discretionary Available at one's discretion; able to be used as one chooses; left to or regulated by one's own discretion or judgment. Economic Value for the Customer (EVC) Criteria used by marketers to determine price, based on the insight that a customer will only buy a product if its value to them outweighs the value of the closest alternative. game theory A branch of applied mathematics that studies strategic situations in which individuals or organizations choose various actions in an attempt to maximize their returns. lease A contract granting use or occupation of property during a specified period in exchange for a specified rent. Opportunity Costs The costs of activities measured in terms of the value of the next best alternative forgone (that is not chosen). target market a group of people whose needs and preferences match the product range of a company and to whom those products are marketed viable Able to be done, possible. Free to share, print, make copies and changes. Get yours at www.boundless.com Pricing

7. Marginal Profit Maximization This series of cost curves shows the implementation of profit maximization using marginal analysis. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikimedia. "Profit max marginal small." CC BY-SA http://commons.wikimedia.org/wiki/File:Profit_max_marginal_small.svg View on Boundless.comCC BY-SAhttp://commons.wikimedia.org/wiki/File:Profit_max_marginal_small.svgView on Boundless.com Pricing

8. Price Controls An example of a poster declaring regulatory pricing in the United States. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikimedia. ""Prices charged in this store will not exceed those indicated in the most recent list of Fair Prices applicable to this - NARA - 512556." Public domain http://commons.wikimedia.org/wiki/File:%22Prices_charged_in_this_store_will_not_exceed_those_indicated_in_the_most_recent_list_of_Fair_Prices_applicable_to _this_-_NARA_-_512556.jpg%23filelinks View on Boundless.comPublic domain http://commons.wikimedia.org/wiki/File:%22Prices_charged_in_this_store_will_not_exceed_those_indicated_in_the_most_recent_list_of_Fair_Prices_applicable_to _this_-_NARA_-_512556.jpg%23filelinksView on Boundless.com Pricing

9. Fixed Costs and Variable Costs This graph breaks down the difference between fixed costs and variable costs. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikimedia. "CVP-TC-FC-VC." Public domain http://commons.wikimedia.org/wiki/File:CVP-TC-FC-VC.svg View on Boundless.comPublic domainhttp://commons.wikimedia.org/wiki/File:CVP-TC-FC-VC.svgView on Boundless.com Pricing

10. Break-Even Calculation We can derive the calculation for the break-even quantity from the relation of total revenue to total costs. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikipedia. "Break-even (economics)." GNU FDL http://en.wikipedia.org/wiki/Break-even_(economics) View on Boundless.comGNU FDLhttp://en.wikipedia.org/wiki/Break-even_(economics)View on Boundless.com Pricing

11. Break-Even Analysis Using Contribution Margin A break-even quantity can also be found using contribution margin. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikipedia. "Break-even (economics)." GNU FDL http://en.wikipedia.org/wiki/Break-even_(economics) View on Boundless.comGNU FDLhttp://en.wikipedia.org/wiki/Break-even_(economics)View on Boundless.com Pricing

12. Oil Price Sensitivity This graph depicts the price fluctuation of oil once consumers began having significant access to information regarding the commodity. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikimedia. "Oil price chronology." Public domain http://commons.wikimedia.org/wiki/File:Oil_price_chronology.gif View on Boundless.comPublic domainhttp://commons.wikimedia.org/wiki/File:Oil_price_chronology.gifView on Boundless.com Pricing

13. Attribution Wiktionary. "viable." CC BY-SA 3.0 http://en.wiktionary.org/wiki/viableCC BY-SA 3.0http://en.wiktionary.org/wiki/viable Wikipedia. "Pricing strategies." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Pricing_strategiesCC BY-SA 3.0http://en.wikipedia.org/wiki/Pricing_strategies Wiktionary. "discretionary." CC BY-SA 3.0 http://en.wiktionary.org/wiki/discretionaryCC BY-SA 3.0http://en.wiktionary.org/wiki/discretionary Wiktionary. "lease." CC BY-SA 3.0 http://en.wiktionary.org/wiki/leaseCC BY-SA 3.0http://en.wiktionary.org/wiki/lease Wikipedia. "Average fixed cost." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Average_fixed_costCC BY-SA 3.0http://en.wikipedia.org/wiki/Average_fixed_cost Wikipedia. "Fixed cost." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Fixed_costCC BY-SA 3.0http://en.wikipedia.org/wiki/Fixed_cost Wiktionary. "break-even point." CC BY-SA 3.0 http://en.wiktionary.org/wiki/break-even_pointCC BY-SA 3.0http://en.wiktionary.org/wiki/break-even_point Wikipedia. "Opportunity Costs." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Opportunity%20CostsCC BY-SA 3.0http://en.wikipedia.org/wiki/Opportunity%20Costs Wikipedia. "Break-even (economics)." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Break-even_(economics)CC BY-SA 3.0http://en.wikipedia.org/wiki/Break-even_(economics) Wiktionary. "game theory." CC BY-SA 3.0 http://en.wiktionary.org/wiki/game_theoryCC BY-SA 3.0http://en.wiktionary.org/wiki/game_theory Boundless Learning. "Boundless." CC BY-SA 3.0 http://www.boundless.com//marketing/definition/demand-curveCC BY-SA 3.0http://www.boundless.com//marketing/definition/demand-curve Wikipedia. "Profit maximization." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Profit_maximizationCC BY-SA 3.0http://en.wikipedia.org/wiki/Profit_maximization Wikipedia. "Pricing strategies." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Pricing_strategiesCC BY-SA 3.0http://en.wikipedia.org/wiki/Pricing_strategies Wikipedia. "Cost-plus pricing." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Cost-plus_pricingCC BY-SA 3.0http://en.wikipedia.org/wiki/Cost-plus_pricing Wiktionary. "target market." CC BY-SA 3.0 http://en.wiktionary.org/wiki/target_marketCC BY-SA 3.0http://en.wiktionary.org/wiki/target_market Boundless Learning. "Boundless." CC BY-SA 3.0 http://www.boundless.com//marketing/definition/economic-value-for-the- customer-evcCC BY-SA 3.0http://www.boundless.com//marketing/definition/economic-value-for-the- customer-evc Wikipedia. "Price controls - Wikipedia, the free encyclopedia." CC BY-SA 3.0 http://en.wikipedia.org/w/index.php?title=Price_controls&printable=yesCC BY-SA 3.0 http://en.wikipedia.org/w/index.php?title=Price_controls&printable=yes Free to share, print, make copies and changes. Get yours at www.boundless.com Pricing

14. OER Commons. License: Other http://www.oercommons.org/courses/pricing-spring-2010/viewLicense: Otherhttp://www.oercommons.org/courses/pricing-spring-2010/view Wikipedia. "Competitive advantage." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Competitive_advantageCC BY-SA 3.0http://en.wikipedia.org/wiki/Competitive_advantage Wikipedia. "Pricing strategies." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Pricing_strategiesCC BY-SA 3.0http://en.wikipedia.org/wiki/Pricing_strategies Free to share, print, make copies and changes. Get yours at www.boundless.com Pricing