From the course: Excel: Market Research Strategies

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Price or volume? The big trade-off

Price or volume? The big trade-off - Microsoft Excel Tutorial

From the course: Excel: Market Research Strategies

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Price or volume? The big trade-off

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- [Instructor] Inherently, all businesses have to choose between price and quantity sold. That's the fundamental truth behind the demand curve, but how do you balance these two factors? Let's take a look at an example of what I call the power of price using Excel. I'm in the 02_04_Begin Excel file. Now, we're looking at the 02_04 price versus volume sheet, and what this shows is, for a hypothetical product with unit sales of 1,000, a price of 45, meaning a revenue of 45,000, and then, unit cost of $16, cost of goods sold of 16,000 then, an overhead of 8,000, we have a profit of 21,000. Now, for the firm, our goal is to maximize profit. As a market researcher, your role is to help the firm to understand how they can go about maximizing that profit by making changes to the product, its features, its price, its attributes, et cetera. So, what if you were presented with an opportunity to either have a 1% improvement in price,…

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