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Establishment
Language of instruction
French, English
Teaching content
UE9
Training officer(s)
L.ORIGI
Stakeholder(s)
L.ORIGI
Présentation
Prerequisite
Being able to calculate a percentage and a percent variation and to put a number in memory on a calculator, fully understanding the vocabulary acquired during the “Performance Assessment” class (1st year, 1st semester) and “Day-To-Day Business Administration” (1st year, 2nd semester), being proficient in VAT calculations.
Goal
Pricing is one of the key elements of a company’s offer. Price level decisions impact the quantities bought by customers, and therefore the turnover, which determines the profits that will ensure the company's longevity.
Educated decisions pertaining to pricing are one of the secrets of managing a thriving company. Analysing the various factors affecting prices helps to make these decisions.
The aim of this course is to review the main constraints involved in setting a selling price, from a quantitative point of view, whether these constraints are imposed by the company’s situation (costs) or by demand (psychological pricing, price elasticity of demand). The course will put a particular emphasis on the impacts of pricing decisions on operational profitability.
Educated decisions pertaining to pricing are one of the secrets of managing a thriving company. Analysing the various factors affecting prices helps to make these decisions.
The aim of this course is to review the main constraints involved in setting a selling price, from a quantitative point of view, whether these constraints are imposed by the company’s situation (costs) or by demand (psychological pricing, price elasticity of demand). The course will put a particular emphasis on the impacts of pricing decisions on operational profitability.
Presentation
Topic 1: BREAK-EVEN POINT
• Contribution income statement: distinction between variable costs and fixed costs, contribution margin calculation, profit calculation
• Break-even analysis (when is the break-even point reached) in the case of an activity evenly spread out over the year, and in the case of a seasonal activity.
• Working out what activity level (turnover or number of products sold) is required in order to reach a given target profit
• Impact on the company’s profitability of abandoning an operation or creating a new operation
Topic 2: COST CALCULATION
• Distinction between direct and indirect costs
• Cost and profit breakdown in an industrial and commercial company: acquisition cost, production cost, distribution cost, total cost
• Cost and profit calculation in a service provider company
Topic 3: PRICING BASED ON COSTS
• How to compare the margin to the selling price (selling markon), to the acquisition cost (cost markon)?
• Impact of an administrative decision (e.g. offering a discount to a customer, hiring an employee, etc.) on the company’s margin
Topic 4: CONSTRAINTS IMPOSED BY DEMAND
• Price elasticity of demand: elasticity calculations and interpretation
• Psychological pricing: calculation and interpretation
• Impact of a price variation on the company’s margin
• Contribution income statement: distinction between variable costs and fixed costs, contribution margin calculation, profit calculation
• Break-even analysis (when is the break-even point reached) in the case of an activity evenly spread out over the year, and in the case of a seasonal activity.
• Working out what activity level (turnover or number of products sold) is required in order to reach a given target profit
• Impact on the company’s profitability of abandoning an operation or creating a new operation
Topic 2: COST CALCULATION
• Distinction between direct and indirect costs
• Cost and profit breakdown in an industrial and commercial company: acquisition cost, production cost, distribution cost, total cost
• Cost and profit calculation in a service provider company
Topic 3: PRICING BASED ON COSTS
• How to compare the margin to the selling price (selling markon), to the acquisition cost (cost markon)?
• Impact of an administrative decision (e.g. offering a discount to a customer, hiring an employee, etc.) on the company’s margin
Topic 4: CONSTRAINTS IMPOSED BY DEMAND
• Price elasticity of demand: elasticity calculations and interpretation
• Psychological pricing: calculation and interpretation
• Impact of a price variation on the company’s margin
Modalités
Forms of instruction
Cours magistral, exercices pratiques, vidéos et exercices corrigés sur le site web de l’enseignant.
Lecture, practical exercises, videos and exercise answers on the teacher's website.
Organization
| Type | Amount of time | Comment | |
|---|---|---|---|
| Face to face | |||
| 15,00 | |||
| Independent study | |||
| Travail personnel indicatif | 30,00 | Travail du cours, recherche des exercices, travail sur des supports complémentaires (dont internet) | |
| Overall student workload | 45,00 | ||
Evaluation
| Control type | Duration | Amount | Weighting |
|---|---|---|---|
| Continuous assessment | |||
| 2,00 | 1 | 40,00 | |
| Final Exam | |||
| 2,00 | 1 | 60,00 | |
| TOTAL | 100,00 | ||