Final Price and Profit Equations
This exercise will help you identify and understand what goes into determining both the final price for a purchased product as well as the equation for the profit on a product.
Among all marketing and operations factors in a business firm, price has a unique role. It is the place where all other business decisions come together. The price must be "right"—in the sense that customers must be willing to pay it; it must generate enough sales dollars to pay for the cost of developing, producing, and marketing the product; and it must earn a profit for the company. Small changes in price can have big effects on both the number of units sold and company profit.
Read the case below and answer the questions that follow.
You are shopping for a new printer to take back to college with you. You decide on the PIXMA iP100 due to its superior photo print quality and are now looking for the best price. Different stores have different deals, plus the manufacturer was offering a $30 mail-in post-purchase rebate. You determined from the Canon website that the MSRP for the printer was $299, but one online store had it listed for $279. That price included free shipping, which you figured was at least a $20 savings. In addition, the seller included a USB cord necessary to connect the printer to your laptop, which was priced at $25 on Canon's website. While the online store paid for shipping, there was a $5 fee to insure the printer during shipping. The online store did take trade-ins of old printers, but you didn't have any used printers to trade anyway. Finally, the online store offered a special holiday coupon on this printer that was good for an additional $10 off the price of the printer.
What was your final price for the printer?
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$209
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$219
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$244
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