Online the timing and tailoring of prices to specific products is the key to successful pricing in online markets. And " Thanks to the ready availability of data in online markets, a pricing manager can easily approximate the elasticity of demands for the different products it sells online." Assuming a 10 percent decrease in price increases sales by 30 percent, calculate the price elasticity of demand? If the wholesale price of the online product is $50 and sells at a price comparison site that charges $0.50 per click and boasts a conversation rate of 5 percent ( an average of 20 percent clicks are needed to generate sale), the incremental cost of each sale is $50. What price should you change for the product? What is the markup? B) . The authors assert that price sensitivity is affected by
Online the timing and tailoring of prices to specific products is the key to successful pricing in online markets. And " Thanks to the ready availability of data in online markets, a pricing manager can easily approximate the elasticity of demands for the different products it sells online." Assuming a 10 percent decrease in
B) . The authors assert that price sensitivity is affected by (1) product cycle, and (2) number of competitors. In fact, " When the number of competing sellers doubles, a firm's elasticity of demand is expected to double ( you should be able to verify this through experimentation?). Assuming the price elasticity you calculated in Problem 1 doubles, what is the new optimal markup? What new price should you charge for the product?
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
