But this is, of course, an optimistic scenario. Let's think of other scenarios.

So let's say it's 1.05.

Well, I won't define the vehicle for you, but I will define the cost for you.

I love Lego Mindstorm, is which a wonderful way to experiment with these things.

The new model will retail for 30,000 yen.

So over here let me draw a better graph than that.

Notice that the selling price is written in red.

Cost of goods sold, well that's just the cost of the goods sold.

The oil companies increased the price of gas again.

Then again for your revenue stream.

Price

Over here, this axis right here is going to be the selling price,

So if the sale is twenty five percent off of x, we could say that the new price, the sale price will be x minus twenty five percent of x is equal to the sale price.

Then auctions like eBay are another example of dynamic pricing.

But this time, we have resellers and the resellers don't work for us.

But it's also a morally important one.

So, let's say, I cut prices below Imran because I realize this increase price strategy was kind of silly.

Par value

Redemption

Present value

Present values

Future value

Dr. Price?

Wenneck, Price, Garner.

So what, how can we figure out how to maximize this profit?

It's a fantastic device that we want to get in the hands of as many people as we can.

They want to encourage high volume purchases, and so they have stepped pricing that is oriented to create volume.

Web Telesales, almost no value added. Retail maybe adds a little support.

Alright?

And they'll essentially come up with some price, which is essentially as high a price as they want do a high price because obviously as a company,

It's not about low cost.

Or if we just wanted to round to the nearest penny, since we're talking about selling something, this optimal profit, this optimal profit, will happen at a selling price of 23 and 30, 23 and 33 cents.

Un bundling is just a fancy word for saying can I somehow decompose the product into separate pieces, giving some for free or if you're lucky, charging for everyone of them.

I could actually price on specific customer segments or on features I know they need.

And so the first of these that I will focus on the first is the price of competing products.

For any given price, it's going to lower the quantity demanded.

See...notice I get my axes confused

Let's say a guy invents a better light bulb.

The price of admission.

We get 30 s squared plus 1400 s minus 16000.

And at first, maybe in 2008, they all say, you know what, this is temporary, that was just a fire sale price, and these auctions don't really reflect a market reality.

How could you have prices that kind of move?

It turns out we made this pretty easy.

It graphs the size of the house in square feet to the sales price in thousands of dollars.

This is telling us that if the selling price increases, then this will become a larger negative number so we're going to sell fewer, we're gonna sell a smaller quantity.