Pricing Striates 2
1. Contribution is calculated based on price and costs. Often, we treat these variables as fixed. What are the implications of treating uncertain variables as fixed?
Some of the implications of uncertain variables could be payroll. You would have to have some baseline of how much you would be paying out every week. Someone may be out sick and you don’t replace the hours or you replace the hours with another employee that has a wage
Running an advertisement in the newspaper that you have changed to size that you want to put in the paper that would change the price either way it could be more or it could be less.
If you have delivery service than there would the price of gas changes from week to week. You would have to budget a little high if you are to come out even.
2. What are examples of conflicting motivations that might lead well- meaning managers to undercut a stated pricing strategy?
Some of the conflicts could be personal when someone comes into the store that the manager knows and gives them a good price break and that could turn in…