Sim Venture - Pricing PDF

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Summary

Playing around with simventure and analyze your financial situation of your company after trying various pricing decision...

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Dana D'Angelo BUSN-101-12H SimVenture October 18th 2019 PRICING

1.

What did you observe in the income statement and balance sheet with an increase in price?

When I raised the price from $645 to $750 I observed that in the balance sheet the cash decreased for nearly $45,114 from $144,867 in year 3 quarter 4 to $99,753 in year 4 quarter 1. The cash flow increased for an amount of $17,964 after 1 quarter borrowing money from the bank. In year 4 quarter 1 the current liability decreased an amount of $22,563. The long-term liability increased to $127,174. Therefore, the total liability was $61,592, which is $27,759 less than year 3 quarter 4. The company received a decreased interest of $90 after 1 quarter borrowing money and experienced a loss in order count and sales value. Moreover, the total income decreased by half after one quarter, from $224,492 in year 3 quarter 4 to $102,936 in year 4 quarter 1. 2.

What did you observe in the income statement and balance sheet with a decrease in price?

When I changed the price from $645 to $515, I observed that in the balance sheet the cash increased for nearly $6000 from $144,867 in year 3 quarter 4 to $160,920 in year 4 quarter 1.

The cash flow decreased significantly for an amount of $21,097 after 1 quarter borrowing money from the bank. In year 4 quarter 1 the current liability decreased an amount of $22,563. The long-term liability decreased to $39,030. Therefore, the total liability is $61,592, which was $27,759 less than year 3 quarter 4. The company received a decreased interest of $90 after 1 quarter borrowing money and experienced a rise in order count but a loss in sales value. Moreover, the total income decreased an amount of $34,690 after one quarter, from $224,492 in year 3 quarter 4 to $189,802 in year 4 quarter 1. 3.

Can you make other observations about “STOCK” which is inventory with either an increase or decrease in price?

If I increased an amount of $105 compared to the original price, the stock would increase a value of $34,550 after one quarter. However, if I decreased the price to $580, the stock would decrease a value of $8032. Therefore, I draw a conclusion that the more stock that is sold, the higher amount of revenues that company will receive. 4.

See if market research can help you make good decisions in this ‘go around’.

After this ‘go around’, I find that market research is an essential business tool and is a work must be done in a competitive market, where too many products are subject to intense competition in order to gain acceptance and belief of customers. Through researching about the price sensitivity, we know more about how it represents the level of customer reaction to an increase or decrease in the price of a company's product, expressed through the price elasticity of demand. That is the method every companies has carried out over the years, which is mainly based on data collected on purchasing demand (consumption volume) at different prices, thereby estimating the level of

increase or decrease in consumers' buying needs will change simultaneously with the change in prices....