# Pricing and Credit Decisions”

Two of the four P’s — Product and Price

There are two parts to this Assignment.

Part 1. Expository Essay:In this Assignment you will respond using an expository essay format. An expository essay involves investigating the topic, analyzing your findings, and supplying a solution or a suggestion to address the problem or task, and supporting your position.

Part 2. Sales Projections:In this section you will use the Unit 6 Assignment template(Excel file) located in Course Documents to compute how much you think you will sell the first 3 months; 6 months, and 1 year? Show how you did the math in your answer.

Part 1. Expository Essay:Describe what your products and/or services will be and the pricing strategy involved for your chosen business. Please respond to the following Checklist items:

• Provide an introductory paragraph to explain your business briefly and the intention in writing this paper.
• Describe what your business will be selling; describe the products and/or services (name 3–4 main ones) and the value proposition. Based on your research of the competition, describe the competition’s product/service and provide the price. Then describe the pricing strategyyou will use and how the competition’s prices have affected your competitiveness in the marketplace.

Pricing Strategies

Penetration Pricing= Pricing below normal, long-term price to gain market share.

Skimming Pricing= Pricing an item high in the short term to capture the prestige market─helps to recover start-up costs.

Variable Pricing/Dynamic Pricing Strategy= Lower pricing for certain customers based on their ability to pay. (Amazon uses this type)

Price Lining= Different quality level product of a certain type are priced by category. Ex: Women’s handbags─Designer bags \$300, name brand \$200 and all other \$100.

Market Pricing= pricing based on the market- what people are willing to pay only works if there is very little or no competitors.

• Explain whether you will buy on credit and the kind of credit terms you expect from your suppliers and why.
• Then explain your customer credit policy; explain whether you will extend credit to your customers and why or why not. If you will extend credit, please describe the terms you expect to receive and/or extend and why.
• Support your responses with your research in your essay using two APA citations in support of your descriptions and responses. Remember to include an APA formatted and citation styled references page at the end of your Assignment.

APA requirements

1. Title page
2. 12 pt. font – Times New Roman
3. Reference page
4. Double-spaced
• Provide a short paragraph in conclusion.
• Make sure to check your grammar and spelling and ensure that your essay is well ordered and logical in addressing the various checklist items. If you need further help with your writing, go the Writing Center for additional resources and assistance.

Your expository essay should be a minimum of 3 pages in length, in APA format and citation style, including the title and references page. This paper should be submitted to the unit Assignment Dropbox together with part 2 below.

Part 2. Sales Projections: In this section you will use the Unit 6 Assignment template(Excel file) located in Course Documents to compute the following:

How much do you think you will sell the first 3 months; 6 months, and 1 year? Show how you did the math in this answer. For example, I expect to have 3 customers a day for the first month, 5 the second month, 7 the third month, and that equals 300 customers the first 3 months.

Multiply the number of sales by your average price to get the first 3 month’s sales. For example, if you have the 300 customers stated in question 4, and the average selling price is \$20, then you will have \$6000 in sales the first 3 months.

Put the Part 1 in a word document. and part 2 is in excel.. I add the template excel file below