Asked by Emmanuel Garcia on Jun 27, 2024
Verified
Pricing decisions based only on revenue considerations often result in an increase in overall profitability.
Pricing Decisions
These are determinations made by businesses about how much to charge for their products or services, influenced by costs, demand, and competitive factors.
Profitability
The ability of a business to earn a profit, which is the surplus remaining from revenue after all costs are deducted.
- Understand the impact of pricing decisions on overall profitability.
Verified Answer
MA
Melissa AliottaJun 28, 2024
Final Answer :
False
Explanation :
Pricing decisions based only on revenue considerations may lead to decreased profitability if the costs associated with producing the product or delivering the service are not taken into account. In some cases, lowering the price may also increase sales volume but decrease profit margin, leading to lower overall profitability. Therefore, pricing decisions should consider both revenue and cost factors to ensure optimal profitability.
Learning Objectives
- Understand the impact of pricing decisions on overall profitability.