COMM 103 Chapter Notes - Chapter 12: Price Skimming, Psychological Pricing, Profit Margin

• School: Queen's University
• Department: Commerce
• Course: COMM 103
• Professor: Gregory Libitz

Document Summary

Understanding cost base = financial options if unexpected changes in market dynamics, reductions in revenue, strategic positioning shifts that comp is planning. 2 % of cost base in our control in near term. 3 market pressures impacting cost base going forward. 4 volume & dollar requirements necessary to achieve breakeven. 5 evaluating cost structure wrt (cid:498)good(cid:499) costs vs (cid:498)bad(cid:499) costs. The composition of an organization"s cost baseigure 12. 1. Also need to determine whether costs involved in manufacturing process (direct or variable costs) or operational support costs (indirect, fixed, semi-fixed costs) Direct/ variable costs + indirect/ fixed costs = total cost base. 1 % of costs that are direct/ variable costs vs % of indirect (fixed or semi-fixed). 2 cost areas that make up greatest % of overall cost base. Variable costs (aka direct costs) are directly tied to product manufacturing/ service delivery. Cost of materials in manufacturing, direct labor & distribution costs.