COURSE OVERVIEW:
The most essential part of retail pricing is understanding the math. If you sell products too cheaply, you run the risk of not covering your costs. Ask for too much money and you risk not selling any product.
Pricing has long been—and will continue to be—a core capability for retailers. Executives, accountants and merchants alike recognise it as one of the key value levers, and, accordingly, retailers have worked to refine their pricing strategy, tactics, and tools over the past several decades in hopes of optimising their approach. Despite recent advances in analytics, decision-support tools, and methodologies, retailers are finding that the traditional approaches are not keeping pace.
One of the daunting tasks being in retail is setting the price and setting it right. Pricing isn’t easy when you’re in the retail scenario—you set the price low and you lose out on profits—you set the price high and you lose out on customers. It’s completely up to you to decide whether you want to sell a lower volume and charge a higher price or high volumes and lower prices. It’s for you to decide the direction which will enable you to make profits. However, when you have a range of products to see, you can take the risk of lowering the prices of few products sometimes, as long you can keep the prices of other products marked up higher.
Many factors influence a retailer's bottom line, including properly priced products that hit the sweet spot of maximising unit sales without sacrificing the profit per unit. Understanding your business cost structure and choosing the right pricing strategy are crucial steps toward achieving your profit goals. Many pricing strategies exist, which is why it may be wise to experiment until you find a strategy that is the most effective for your individual business.
This course is designed to provide a sound introduction to the uses of mathematics in pricing. It has dual objectives of teaching both mathematics and financial literacy. The mathematical formulas provided here can be useful tools for prediction, for estimating the dollar value of something, and when we need to place a reasonable dollar value on something. In this course we will examine some of these situations and the mathematical tools that can be useful in dealing with them.
The first part of this course will show you how to determine retail prices by using markup from cost, markdown, and markup based on selling price. Then discusses how to calculate the per cent markup or markdown based on cost and selling prices. Also, describes how to determine and interpret gross and net profit margins.
The second part explains how to calculate invoice costs based on list price and trade discount. Then helps you understand the terminology surrounding cash discounts and be able to calculate them. Also, discusses how to calculate the single discount per cent equivalent to a series of discount per cents. Finally, explains the differences between per cent, straight-line, and MACRS depreciation and shows you how to calculate depreciation rates and amounts, using these methods.
LEARNING OUTCOMES:
By the end of this course, you will be able to understand:
· What is pricing mathematics?
· The importance of mathematics in pricing
· How to determine retail prices by using markup based on cost?
· What is the markup based on cost formula? How to use this formula within real business situations?
· How to determine retail prices by using markdown?
· What is the markdown formula? How to use this formula within real business situations?
· How to determine retail prices by using markup based on selling price?
· What is the markup based on selling price formula? How to use this formula within real business situations?
· How to use both the markup and markdown formulas within real business situations?
· How to calculate the per cent markup or markdown based on cost and selling prices?
· How to determine and interpret gross profit margin?
· How to determine and interpret net profit margins?
· How to use gross profit margin and net profit margin within real business situations?
· What is the trade discount formula? How to use trade discounts within real business situations?
· How to calculate invoice costs based on list price and trade discount?
· What are series discounts? How to use series discounts within real business situations?
· How to calculate the single discount per cent equivalent to a series of discount per cents?
· How to calculate cash discounts? How to use cash discounts within real business situations?
· What is the single equivalent discount formula?
· How to calculate price appreciation? How to use price appreciation within real business situations?
· What is the compound interest formula?
· How to use depreciation as a per cent within real business situations?
· What is the straight-line depreciation formula? How to use this formula within real business situations?
· What is the annual depreciation amount formula?
· What is the depreciated value formula?
· How to distinguish between per cent, straight-line, and MACRS depreciation and calculate depreciation rates and amounts?
COURSE DURATION:
The typical duration of this course is approximately 3-4 hours to complete. Your enrolment is Valid for 12 Months. Start anytime and study at your own pace.
COURSE REQUIREMENTS:
You must have access to a computer or any mobile device with Adobe Acrobat Reader (free PDF Viewer) installed, to complete this course.
COURSE DELIVERY:
Purchase and download course content.
ASSESSMENT:
A simple 10-question true or false quiz with Unlimited Submission Attempts.
CERTIFICATION:
Upon course completion, you will receive a customised digital “Certificate of Completion”.