Pricing Tests and Price Elasticity for one product
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| 11.07.2010, 10:07 |
Challenge
#1: How do we set the price for a single product to maximize its revenue? |
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This
application uses results of pricing tests to estimate impact of prices on
unit sales and revenue. The results can help you optimize revenues with
limited pricing experiments. |
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The key to estimating sales from pricing tests is to estimate
the price elasticity from test results. The mathematics of price elasticity
is described in the appendix below. |
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The model computes revenue as price * sales units. |
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Challenge
#2: How do we set the price for a single product to maximize profits? |
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The
model computes profit margin as Revenue – Costs. Costs can be cost of goods or total costs or whatever
you choose, in order to compute gross margin, operating margin or any other
profit margin you choose. |
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The key
step in computing profit margins is to estimate costs as a function of sales
levels, as described in the Technical Notes below. |
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The model includes Excel charts that provide graphical views of
key variables. These charts are part of the model, and they are included by
default in exported Excel workbooks. You can add more charts, import them,
and the new charts will be included in exported Excel workbooks. |
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Категория: Модели для корпоративных финансов | Добавил: Den
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