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Managerial Economics For Dummies by Robert J. Graham

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Chapter 14

Increasing Revenue with Advanced Pricing Strategies

In This Chapter

arrow Using elasticity to determine price

arrow Basing price on cost

arrow Selling the same good at different prices

arrow Bundling goods for a bundle of profit

arrow Pricing for competitive wars

You’ve probably seen the game show The Price Is Right. In the show, contestants are shown a product and asked to guess its price. The contestant who guesses closest to the actual retail price without going over is declared the winner.

The question of the right price is crucial in business decision-making. The price marked on a product isn’t necessarily the right price. As a consumer, I tend to think that most prices are wrong — they’re way too high. For a business losing money, the price probably seems way too low. Before deciding whether or not a price is right, you need to know what your goal is.

Throughout this book, I emphasize various methods to determine price. In this chapter, I introduce more advance pricing techniques. I start by ...

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