MGMT 1 Lecture Notes - Lecture 1: Merage Family, Target Costing, Profit Margin
Document Summary
Break-even analysis process used to determine profitability at various levels of sales. It is the point where revenues from sales equal all costs. Break-even point = total fixed costs/(price of one unit variable costs of one unit) Total fixed costs all the expenses that remain the same no matter how many are made or sold. Variable costs costs that change according to the level of production. Skimming price strategy strategy in which a new product is priced high to make optimum profit while there"s little competition: however, these large profits will eventually attract new competitors. Penetration strategy strategy in which a product is priced low to attract many customers and discourage competition: enables the firm to penetrate and capture a large share of this market quickly. Psychological pricing pricing goods and services at price points that make the product appear less expensive than it is: i. e. ,999 instead of ,000; usually done by gas stations.
