Product and Pricing - Essay Example

Only on StudentShare

Extract of sample
Product and Pricing

Consumer surplus is defined as "the amount that customers benefit by being able to purchase a product for a price that they would be willing to pay" (Economic Surplus 2007). When a company prices less than the amount that buyers are willing to pay for the product, customers will enjoy the consumer surplus in purchasing the product. Thus, companies should be adept in their pricing strategy. They should be able to determine individual consumer surplus and fully expropriate it for their advantage.
Identifying the exact value attributed by buyers to a product is a great challenge for a business organization. As individuals are unique, they often have different perceptions of the monetary value of an offering. Some price sensitive customers may find a product too expensive but some may even find it a bargain. One of the things that company can do is to conduct a survey before releasing the product in order to get an average price that the target market is likely willing to pay. The company can also experiment by raising and lowering the price in the market and monitor the customers' response through product sales and demand. However, all these can be very tedious and can erode the identity and image of the product in the market. It can even bring confusion to the customers.
I believe that com ...
Download paper


It is irrefutable that a business organizations' pricing decision is often based on the cost incurred in the production of the commodity. Companies often account all their expenditures and simply put a mark-up as their profits. However, what they fail to recognize in their pricing decisions is the value that customers attribute to their products…
Author : muhammadconn

Related Essays

Product Pricing Strategy
Hence, it is very important that the organization should know all their costs in developing the products and in their marketing & inventory holding. Once the internal thresholds are known there are multiple additional factors that drive pricing decisions from market perspective. Monroe and Bitta (1978. pp414) presented a consolidated view of multiple models of product pricing decision classified as - new product models, product line models, price change models and price structure models. The indicated their choice for market comparisons based pricing - like related products, volumes in...
5 pages (1255 words) Essay
Capital Asset Pricing Model Essay
The Capital Asset Pricing Model (CAPM) is a liaison involving risk and return on a portfolio of investments. Sharpe, William F (1964, pp. 425-442) formulated the CAPM hypothesis. It is the groundwork of modern finance which puts forward that the risk premium of a single asset is equal to its beta times the risk premium of the market portfolio on the whole. Beta computes the level of inter-movement of the asset's return and the total return on the entire market portfolio of an investor. Put differently, beta measures the organized risk of an asset which is nothing but the quantity of risk and...
8 pages (2008 words) Essay
Product Innovation and Pricing
The camera has an automatic mode which will enable reasonable quality photographs by even people with minimal knowledge of the subject. The price at less than $300 is attractive by market conditions. Here is a camera for the amateur photographer which is easy to carry and to use, with the potential to take sharp and good quality photographs with simplicity. The camera is clearly on the upper right quadrant of a VO Grid, and has the potential to participate aggressively in the emergent mass market for basic digital cameras for amateur use.
4 pages (1004 words) Essay
Gross Domestic Product Bachelor Essay
There are three equivalent approaches in calculating the GDP: the value-added approach which looks at the production of firms; the income approach which determines where firms spend their revenues; and expenditures approach which assesses where households spent their income (How Do We Measure GDP 1). Though all these approaches come up with the same value for GDP, the most commonly used method is the expenditure approach.
3 pages (753 words) Essay
Product and Pricing Strategy
te a variety of industrial and office-based computer and laptop solutions, along with state-of-the-art services, software collaborations and innovative accessories.
5 pages (1255 words) Essay
Got a tricky question? Receive an answer from students like you! Try us!