9.00 Explain pricing strategies for making effective pricing decisions. 9.03 Calculate the selling price of merchandise and services. D. MARKETING A SMALL BUSINESS. Profit. Revenue remaining after the expenses of running the business have been deducted . Factors that affect profit:
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9.03 Calculate the selling price of merchandise and services.
D. MARKETING A
The amount paid by a business for pr pricing decisions.oducts purchased for resale or for use in the production of other goods.
The first expense that must be paid.
Is deducted directly from sales revenue to determine gross profit.
Formula (used on the income statement):
- Cost of merchandise sold
- Business Expenses
Net profitCost of Merchandise Sold
Retail Price = Cost + Markup
RP = C + MU
13.50 = 10 + 3.50
An item costs the business $10 and has a markup of $3.50. What is the retail price?
Variations of the equation
C = RP – MU or MU = RP – C
The retail price of an item is $30.00 and the markup is $10.00. What is the cost of the item?
20 = 30 -10
Offered to buyers as an incentive for paying the invoice quickly.
Ordinary dating pricing decisions.
based on the date of the invoice
buyer receives a 2% discount if the invoice is paid within 10 days, or the full (net) amount is due in 30 days
indicates that the payout period does not begin until the date indicated in the terms
5/10, net/30, June 15
buyer receives a 5% discount if the invoice is paid within 10 days of June 15, or the full amount is due 30 days from June 15Cash Discounts
End-of-month dating pricing decisions.
The payout period does
not begin until the last
day of the month in which the invoice is dated.
2/10, net/30, EOM
2% discount if the invoice is paid within 10 days of the last day of the month of the invoice, or the full (net) amount is due 30 days from the last day of the monthCash Discounts