Essay
MNE3701 ASSINMET 4 2023
- Institution
- University Of South Africa (Unisa)
MNE3701 ASSINMET 4 2023
[Show more]
Content preview
BMZ ACADEMYBMZ ACADEMY
@061 262 1185/068 053 8213/0717 513 144
BMZ ACADEMY 061 262 1185/068 053 8213/0717 513 144
, BMZ ACADEMY
Having acquired sufficient knowledge and skills on entrepreneurship and small
business management, you must demonstrate practical competencies in
applying a pricing system and promotional planning. Think of any business you
would like to start and answer the following questions:
QUESTION 1
By using practical examples, critically discuss how you would applying a
pricing system in your business. (10)
The importance of setting a price is seen in the revenue equation in business. The
price of a product forms half of the total equation, where sales X price = revenue. A
small change in price can make a huge difference in revenue. The price therefore has
a dual influence on the total sales revenue: directly, as part of the gross revenue
equation, and an indirect impact on quantity sold. Bear in mind that because of the
complex nature of service pricing, this study unit focuses primarily on product (goods)
pricing. Because price equals total cost plus profit, a careful study of cost in a business
may keep the business from pricing too low. The concept “average pricing” is used
when the behaviour of variable and fixed cost is treated equally. Average pricing is
calculated by means of the total cost divided by the quantity sold over a certain period.
Break-even analysis
In order to develop a pricing system, an entrepreneur should understand break-even
analysis and mark-up pricing. Cost break-even analysis is used to determine the
quantity point at which the product will generate enough revenue to start showing a
profit.
Mark-up pricing
There is a difference between the mark-up on cost and the mark-up on selling price. A
farmer selling chickens incurs certain costs in raising chickens to the stage that they
are in a selling condition (e.g. food, medicine, labour and energy costs). The farmer
calculates the break-even cost and then adds a mark-up. The chickens are sold to an
intermediary (e.g. Chicken Licken). The retailer calculates his or her mark-up
BMZ ACADEMY 061 262 1185/068 053 8213/0717 513 144
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller BMZAcademy. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R70,00. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
57413 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy summaries for 14 years now