MGT330: Pricing Exercises This exercise consists of four different elements. Use of Excel is recommended. Exercise 1: Marginal Analysis Marginal analysis is based on the assumption that as the product's price alters, so will its level of demand (sales). Therefore, this approach looks for the maximum profit point, when considering the firm's cost structure and the likely sales at different price points (which is essentially the product's demand curve). ACTIVITY/TASK Determine the best price point that is, what is the best price to charge to maximize profits). Start by completing the table below: If the price is set at: Then unit sales are likely to be: Total Revenue Allocated Fixed Costs Variable Cost/Unit Total Production Cost Gross Profit S60 500 $10,000 $10 SSO $10,000 1.000 1.500 540 S10.000 2.000 520 2.500 S10,000 $10,000 $10 Question to consider: Is this approach realistic? Why