If a new product has been developed by the company then you must determine the D
ID: 373029 • Letter: I
Question
If a new product has been developed by the company then you must determine the Development Cost attached to it first. Forecasting the demand for such model and product life cycle according to the market demands and purchasing power and segmentation we are looking out for.
The stand-alone price for such model would be derived with total cost + development cost + margins(profit). At beginning the margins are kept high to bring in the profitability to the company and later as competition grows, you can lower the margin to increase the market share and play on a volume game.
Thus we should strech the price so that it increases the profits of organization along with generated revenue.
Explanation / Answer
Your company has developed a new product, say a TV + digital video recorder (build in). How do you determine how much more to charge for such a product over the stand-alone price? Select the pricing model and defend it?
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