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wants to build its global sales volume quickly. it enters all markets at the lowest price possible it can charge, which undercuts the prices of all its competition. the company knows this might result in initial losses, but in a few years, it should be making substantial profits with a cost advantage over everyone else. this is an example of

Sagot :

If company wants to build its global sales volume quickly when it enters all markets at the lowest price possible is an example of Experience curve pricing.

To make substantial profit with a cost average over everyone else company use experience curve pricing. In experience curve pricing, a company initially charges a price lower than its average total cost with the expectation that costs would decrease as the firm produces more in the future. This curve suggests that the more you produce, the less each unit costs you. This happens because fixed overhead costs such as administration, insurance and rent remain constant while the number of units you produce goes up. You can calculate your per-unit cost based on the experience curve so that you can better manage your pricing in relation to productivity.

We calculate our pricing based on the experience curve that is  number of units times variable cost per unit plus fixed overhead divided by the number of units, plus markup percentage you have chosen.

To learn more about Experience curve pricing please visit:

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