The online retail operation you recently opened is doing
well but you are uncertain of your pricing strategy. Currently the typical
customer purchases four items at an average price of $11.96 and for an average
transaction size of $47.84. The cost of goods is 60 percent of sales, which
yields a gross margin of 40 percent. You are considering lowering prices by 10
percent across the board so you can better compete with other music
e-tailers. If you lower prices by 10
percent, you believe that the average number of items purchased per customer
would rise by 25 percent.
assumptions are correct, should you lower prices by 10 percent across the
board? If not, do you have an alternative pricing strategy to propose?
Address the following
in your paper:
•Review the scenario
and address each question while showing work for all mathematical problems.
analysis for all conclusions made.
•For any assumptions
made, be sure to reference the scenario when providing justification for
Include a title page and any references used.