supply and demand, volume of sales, compete, price policies, credit terms, set prices.
1. It is very difficult … without sound price policy.
2. Of course we are interested in producing the …with the lowest unit costs.
3. The … of this store are very beneficial for a customer.
4. Their business will fail if they pursue unsound … .
5. The government usually … for public utility services.
6. In pure competition the forces of … operate.
Exercise 2. Answer the following questions:
1. Why is it difficult to determine the right price?
2. Why is the seller interested in the price that produces the highest volume of
sales at the lowest unit cost?
3. Why do many business follow unsound pricing policies?
4. In what way are agricultural prices decided?
5. How are industrial products usually priced?
6. Why does the government usually set the prices for public utility services?
7. Why is it so important to know the levels of supply and demand when
dealing with the pricing?
8. Why is everything related by price?
Exercise 3. Read the dialogue:
Introducing a new line…
Dick is introducing a new line of products and is talking to his friend Tom, a business consultant, about it.
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Dick: |
It’s the first time when I’m in business for myself. |
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Tom: |
Don’t worry. The store has always been doing well. It has a great location and as far as your new line of merchandise… |
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Dick: |
That’s what I wanted to talk to you about. Can you give some ideas how to charge the price? |
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Tom: |
With pleasure. Generally, there are two types of pricing policies. There is emphasis and price de-emphasis. |
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Dick: |
What’s the difference? |
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Tom: |
The price emphasis policy emphasizes low prices. This encourage sales. But low prices doesn’t give extra services. |
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Dick: |
So, a really low prices means no credit, home delivery, repair, installation, and other services. |
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Tom: |
That’s what I mean. But many people are interested only in the low price and not in the extra services. |
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Dick: |
Yes, and vice versa. The price which I set determines the number of sales. I must think thoroughly about it. |
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Tom: |
A good example of price emphasis is loss-leader pricing. It means that you choose one item - let’s say an electric razor – at a price just above the cost. The customers will come to your shop to buy this loss-leader item. But since they are inside they can decide to buy a few other things they need. |