From the course: Excel: Market Research Strategies

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Products without pricing power

Products without pricing power - Microsoft Excel Tutorial

From the course: Excel: Market Research Strategies

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Products without pricing power

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- [Instructor] Well textbooks often assume that demand curves are straight lines, in the real world, demand curves are often exactly that, curves. What that really means is the price elasticity of demand, the willingness people have to pay for a particular product, changes, and their sensitivity to price changes, as the product price changes. This can have a big impact on the price that we want to sell. Let's take a look at what I'm talking about. I'm in the 0203 begin Excel file. Now, we need to be able to adjust our price based on the level pf price elasticity we see in the market for our product. This price elasticity can change over the course of the demand curve. So what we see here is a product with fixed cost of $7,000, variable cost of $15 per unit. Now, what I want to do is go through and determine where my profit maximization is. So, of course, as I would expect, I'm not going to make any money if I'm…

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