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average revenue (AR)

the average amount of money received for selling one unit of a product, or simply the price of that unit.


the practice of exchanging goods and services for other goods and services rather than for money

break-even analysis

a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output

break-even chart

a graphic presentation of the break-even analysis that shows when total revenue and total cost intersect to identify profit or loss for a given quantity sold

break-even point (BEP)

the quantity at which total revenue and total cost are equal

demand curve

a graph relating the quantity sold and price, which shows the maximum number of units that will be sold at a given price

demand factor

factors that determine consumers' willingness and ability to pay for goods and services

marginal analysis

a continuing, concise trade--off of incremental costs against incremental revenue

marginal cost (MC)

the change in total cost that that results from producing and marketing one additional unit

marginal revenue (MR)

the change in total revenue that results from producing and marketing one additional unit


the money or other considerations (including other goods and services) exchanged for the ownership or use of good or service

price elasticity of demand

the percentage change in quantity demanded relative to a percentage change in price

pricing constraints

factors that limit the range of prices a firm may set

pricing objectives

specifying the role of price in an organization's marketing and strategic plans

profit equation

profit = total revenue - total cost; or profit = (unit price x quantity sold) - (fixed cost + variable cost)


the ratio of perceived benefits to price; or value = perceived benefits / price


the practice of simultaneously increasing product and service benefits while maintaining or decreasing price

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