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Essay / Research Paper Abstract
This 5 page paper looks at different pricing scenarios for books, where the fixed costs, marginal costs and market up are given, The paper considers scenarios where there are additional large orders placed and the way discounts may be applied to wither the large order only or across the full publication run. The bibliography cites 6 sources.
Page Count:
5 pages (~225 words per page)
File: TS14_TEbookpri.rtf
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Unformatted sample text from the term paper:
fixed costs, a marginal cost for each book and we know that the mark up needs to be 40%. If we have a total of 5,000 book sales we can
work out the costs for each book and then look at what needs to be added onto the costs to achieve the 40% mark up to cover administration and profit
margin. If we undertake the calculation we will see the following Table 1 Cost for 5,000 books Fixed costs (a) 20,000 Number of books to be sold (b) 5,000
Fixed cost per book sold (a/b) (c) 4 Marginal cost per book sold (d) 12 Total cost of the book to publishers (c + e) (f) 16 Mark up of
40% (f x 40%) (g) 6.4 Selling price (f + g) 22.4 Using this approach we see that the selling price of the books (where sales are expected to
be 5,000) is 22.40 per book. Part 2 When the number of sales increases and the sale price remains the same the profit increases because fixed costs do not
increase as sales increase. This results in a lower proportion of the fixed costs to be carried by each book lowering the cost for each book. If we look
at the way in which the costs are attributed to it is possible that the profit margin could be retained and higher profits made if there were a larger number
of sales. A lower price, but higher sales may result in a higher profit (Watts, 1996). The first approach, if considering a large order for a further 5,000
books may be to assume that the costs have been covered by the first 5,000 books, and the additional costs of producing these books are only the marginal costs. If
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