Republic of uzbekistan andijan machine-building institute fundamentals of business management

Product price- the price paid for the product by production or other businesses. 
Operating expenses- all costs related to product production. It includes monthly salary, product 
storage and display devices, utilities, taxes, etc. 
Benefit- money left over after all taxes and expenses have been paid. 
Gross profit- a very important factor in determining the price. Gross profit is the difference 
between the selling price and the product price. It shows the amount of money you have on hand 
that pays for production and provides profit. 
Additional cost.A pricing concept related to gross profit is markup. The markup is the amount 
added to the cost of goods sold. The markup is equal to the expected gross profit. The additional 
price is determined as a percentage of the product cost or product sales price. If a product costs 
$15 and its markup is 100%, the markup is $15 and the product costs $30. That $30 item will have 
a 50% markup on the sale price. The calculation of cost-plus price and sales-plus price is shown 
in the formula in Figure 10g-5. 
Reduced price. Businessmen cannot always sell products at their original prices. If the demand 
for the product is not as high as projected, if the sales season ends, or if the product is overstocked, 
businessmen have to lower prices. A reduced price is a reduction of the original price. 
Additional pricing formulas 
Additional cost 
Cost plus price 
Product price + percentage markup = markup on cost 
Additional cost to sale price 
Gross profit + selling price = interest plus selling price 
10 – 5 pictures 
What is the relationship between incremental cost and expected gross profit? 
A price drop should be understood as a pricing error because it reduces the amount of money a 
business pays for production and profits. But original selling prices are set higher because the 
product is new and in high demand 

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Small price reductions can still result in a profit for the rest of the product being sold. The 
remaining product can be sold at very low prices to cover production costs and expenses. What is 
the formula for calculating the selling price of a product? 
2 destination Distribution channels. 
1. Distinguish between direct and indirect channels of distribution. 
Do you have any custom products launched in India or New Zealand? If so, it's likely to be a 
complicated and time-consuming process before it reaches your warehouse through several 
countries. On the contrary, have you bought the product of the farm? where local producers 
produce fruits, vegetables and other home-grown products. The products are transported a short 
distance away and can be harvested the same day in the morning. Both cases describe the 
distribution process. Distribution involves defining the best methods and processes used for a 
consumer to find, obtain, and use a product or service. Distribution is the positioning and 
techniques used to make a product or service accessible to a target market as an element of the 
marketing mix. The route a product is shipped and the businesses involved until the product is 
delivered from the manufacturer to the final customer are known by the quality of the distribution 
channel.