Factors that Makeup Prices

1
Factors that Makeup Prices

• Analyzing Revenues, Costs, Expenses

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What is Price?

• Price is the value of money placed on a good or
  service.
• -Important factor that helps establish and
  maintain a firms image, competitive edge, and
  profits.

3
Factors that must be addressed in a price

• Cost of Goods Amount to purchase or produce
  goods to be sold
• Overhead Expenses Costs of operating a
  business.
• Profit Amount of money left over after costs
  and expenses are paid.

4
Revenue

• Any money that is generated and flows into a
  business.
• Most money in a business is generated through
  sales revenue
• Price determines how much sales revenue is
  generated

5
Examples of Non-Sales Revenues in Sports Marketing

• Sponsorship Revenues
• Licensing Revenues
• Interest Earned

6
Costs Expenses

• Any money paid by a company to operate and
  maintain the business.
• Dollars that flow out of a business

7
Basic Business Formula

• Revenue Costs Expenses
• Net Profit or Loss

8
Income Statement

• A financial statement that lists a companys
  revenue expenses to determine net profit or
  loss over a period of time. (Referred to as a
  companys bottom line)

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Break-even Point

• Revenue Costs Expenses

10
Markup or Margin

• The amount of profit added to costs or breakeven
  point.
• Price Costs(B.E.P) Markup(profit)

11
Basic Pricing Formula

• Costs Markup Price
• Markup is usually expressed as a percentage.

12
Other factors Affecting Price

• Competition
• Quality/Image
• Supply Demand
• Channels of Distribution
• Promotional Discounts
• Seasonal Discounts

13
The Main Goal of all Businesses

• Revenue gt Costs Expenses