I (Meaning and importance of Exports) Unit Structure

3. Disadvantageous in Long Run 
Generally it is easier to reduce the price but difficult to raise 
it as there is risk of customers switching their loyalty over brands in 
the market. 
4. Prestige Status 
Buyers may not have felling of status in buying a product 
purchased by the masses and whose price is also considerably 
low. 
5. Blocking of Funds 
Exporter‟s funds may get blocked of there are no quick sales 
despite low prices. 
6. Price Resistance 
When consumers get used to lower prices, they will resist 
any future increase in price by the exporter. 

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7. Problem of Obsolescence 
When a product loses share in the market, the exporter is 
forced to quit the market. This situation may arise when the product 
becomes out dated. 
10.8
BREAK-EVEN ANALYSIS
10.8.1
MEANING 
It is a technique commonly used in costing to analyse the 
cost-volume-profit relationship. Break even technique is concerned 
with finding out that level or point at which the sales will break-even 
(no profit or no loss). 
The point or the level at which the sales break even is called
“break even point:”. The break even point is that point at which the 
firm‟s total sales revenue is equal to the cost of goods sold. The 
BEP can also be called as “No Profit, No Loss Point” because at 
this point there is neither profit not loss to the firm. In other words, it 
can be said that it is the first or the staring point towards profit. 
Anything that is sold over and above BEP level of output indicates 
profit to the firm. 
An export firm will break even when the total export revenue 
(FOB price plus Incentives) is equal to the total cost of goods sold, 
break even analysis is useful to exporters i.e. To decide the 
minimum guantily of goods to be sold in the export markets, and to 
fix the export price so as to recover the cost of goods sold.