GENERAL KNOWLEDGE

Detailed explanation-1: -For example, if you sell the product for $10.00 with variable costs of $4.00 and fixed costs of $3.50 per unit, then the net margin, or profit, is $2.50 per unit, or 25%. Margin is calculated as a percentage of the final selling price. You can adjust your profit margin but be sure your price covers your costs.

Detailed explanation-2: -Pricing is a key element of the marketing strategy. It does not require significant investments or resources, and is perhaps the most accessible lever to manage profitability. Even minor fluctuations in pricing can have a significant impact on both revenues and profitability.

Detailed explanation-3: -What is a Profit-Oriented Pricing Strategy? A profit-oriented pricing strategy means that we’re going to set our product price based on a particular profit goal. That could be a target return-meaning we want to make a certain percentage on each unit that we sell or it could be that we want to maximize profit.

Detailed explanation-4: -Pricing is the Key to Increasing Profits That is to say, pricing becomes more of a reflection of their costs, or competitors’ price tags than a function of how to strategically increase a company’s own profitability.