D. Break-Even Analysis 1. Once you know your costs, you can determine how many products you must sell at a given price to cover costs and make a profit. Breakeven analysis is a tool for analyzing revenues and costs to find the profit at various levels of quantity sold. You can use breakeven analysis to see what happens to revenues, costs, and profits when you sell various quantities at a particular price. Breakeven analysis has several limitations and should only be used as one tool in conjunction with other data.
Breakeven analysis looks only at profitability, leaving out other influences.
It doesn't guarantee that you'll sell the quantities you need to earn the projected profit. Breakeven analysis doesn't take into account changes you may incur over time. B. Demand-Based Pricing 1. When you use this strategy, you place more emphasis on the influence of customer needs than on the influence of costs, profits, and so on. Pricing a. Skimming pricing is a pricing strategy in which a new product is initially priced high to attract customers who are willing to pay for unique benefits and high quality.