This week you are working on your price strategy. If you could choose any price, what would it be? Keep in mind the law of diminishing marginal returns. For this assignment select and explain your price strategy, why you believe it will work, and how it will affect your long term forecasts. Provide an illustration/chart with this as well.
add two scholarly sources
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This week you are working on your price strategy. If you could choose any price, what would it be? Keep in mind the law of diminishing marginal returns. For this assignment select and explain your price strategy, why you believe it will work, and how it will affect your long term forecasts. Provide an illustration/chart with this as well.
Add two scholarly sources.
Step 1: Understand the task
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You need to pick a pricing strategy (e.g., penetration pricing, skimming, value-based pricing, premium pricing).
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Explain why it works in your market/industry scenario.
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Show awareness of the law of diminishing marginal returns (profit and sales growth taper off after a point).
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Provide a chart/illustration to demonstrate the relationship between price, demand, and long-term revenue.
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Back everything up with at least two scholarly sources.
Step 2: Choose a Pricing Strategy
Some common approaches:
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Penetration Pricing: Start low to gain market share, increase later.
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Skimming Pricing: Start high, lower over time as competition increases.
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Value-Based Pricing: Price based on customer-perceived value.
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Premium Pricing: Set high prices to emphasize exclusivity and quality.
Example choice: Value-Based Pricing — effective if your product solves a unique pain point and customers see long-term value.
Step 3: Explain Why It Will Work
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Show how it aligns with your customer segment.
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Link it to marginal returns:
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At very high prices, fewer people buy → sales volume drops.
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At very low prices, profit per unit shrinks.
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Value-based pricing balances these forces by setting a sustainable middle ground.
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Step 4: Discuss Long-Term Forecast Impacts
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Stable pricing builds brand trust.
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Helps with predictable revenue growth.
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Supports reinvestment in operations, marketing, or innovation.
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Prevents constant undercutting or over-reliance on discounts.
Step 5: Add a Chart/Illustration
Here’s a basic concept for your chart (you can recreate in Excel or Word):
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X-axis: Price per unit.
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Y-axis: Total Revenue.
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Curve: An inverted-U shape showing revenue rising with moderate pricing, then falling when prices are set too high (law of diminishing returns).
This visually shows that the “sweet spot” price maximizes long-term returns.
Step 6: Support with Scholarly Sources
Here are two you can cite in APA:
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Hinterhuber, A. (2008). Customer value-based pricing strategies: Why companies resist. Journal of Business Strategy, 29(4), 41–50. Developing a Pricing Strategy with Long-Term Forecast Considerations appeared first on Skilled Papers.
