S10: Price

Question 1

How is Price Elasticity calculated?

Answer 1

(△Q Product / Q Product) /

△P Product / P Product

Question 2

How can price elasticity be explained simply?

Answer 2

If the price increases by 1%, demand for the product drops by X%

Question 3

What are the components of the Value Pricing Thermometer?

Answer 3

(From $0)

1. $0
2. Cost of Goods Sold (COGS)
3. Price
4. Perceived Value (PV) / Willingness to Pay (WTP)
5. True Economic Value (TEV)

Question 4

What section of the Value Pricing Thermometer includes the firm’s incentive to sell?

Answer 4

The difference between COGS and Price

Question 5

What section of the Value Pricing Thermometer includes the customer’s incentive to purchase?

Answer 5

The difference between Perceived Value (PV) / Willingness to Pay (WTP) and Price

Question 6

How do you calculate cross price elasticity?

Answer 6

(△ Q Product A / Q Product A) /

△ P Product B / P Product B

Question 7

What is 1st Degree Price Discrimination?

Answer 7

Charge each customer their max WTP

Question 8

What is 2nd Degree Price Discrimination?

Answer 8

Charge less/unit for volume purchases

Question 9

What is 3rd Degree Price Discrimination?

Answer 9

Charge less to different segments

Question 10

What is the break-even cannibalization rate?

Answer 10

BEVCR = margin of new product / margin of old product