Examples of Opportunity Costs in the following topics:
-
- The break-even point is the point at which costs and revenues are equal.
- A profit or a loss has not been made, although opportunity costs have been "paid", and capital has received the risk-adjusted, expected return.
- Try to reduce the fixed costs (by renegotiating rent for example, or keeping better control of telephone bills or other costs)
- In the linear Cost-Volume-Profit Analysis model, the break-even point - in terms of Unit Sales (X) - can be directly computed in terms of Total Revenue (TR) and Total Costs (TC) as: where TFC is Total Fixed Costs, P is Unit Sale Price, and V is Unit Variable Cost.
- It assumes that fixed costs (FC) are constant.
-
- So the relevant cost would be the cost that a buying company would incur if it made the product itself.
- The first step involves calculation of the cost of production, and the second step is to determine the markup over costs.
- The total cost has two components: total variable cost and total fixed cost.
- A cost-plus price will equal average variable costs plus average fixed costs plus markup per unit.
- The total average cost for a product is determined by dividing the total fixed costs (TFC) and total variable costs (TVC) by the quantity of the product produced, and then summing these together.
-
- Many factors affect value, including the customer's cost to change or implement the new product or service and the customer's cost for not selecting a competitor's product or service.
- Cost in these cases can be defined in any terms applicable to the customer: it can be a monetary, time, effort, opportunity cost, or some combination of those.
-
- Perceived costs are the opposite of the perceived benefits.
- For example, an item of clothing costs a certain amount of money.
- " could be phrased as "How much does it cost?
- " price and cost are two different things.
- Other common perceived costs include risk of making a mistake, related costs, lost opportunity, and unexpected consequences.
-
- The new service development process involves recognizing chances and opportunities in a fast changing technological environment.
- Development is very abstract and can be linked with some of the following keywords: technological improvement, cost reduction, general welfare, improved relations, and movement in a positive direction.
- An offering is a package consisting of different proportions of a physical product, service, advice, delivery, and the costs.
- For example, car manufacturers should recognize that rising gas prices are an opportunity to create fuel efficient cars .
- Innovative technology provides important opportunities for new service development.
-
- International operations are therefore a direct result of either achieving higher levels of revenue or a lower cost structure within the operations or value-chain.
- MNC operations often attain economies of scale, through mass producing in external markets at substantially cheaper costs, or economies of scope, through horizontal expansion into new geographic markets.
- High growth in the external environment is a strong opportunity for most incumbents in the market.
- Combining these four challenges for global corporations with the inherent opportunities presented by a global economy, companies are encouraged to chase the opportunities while carefully controlling the risks to capture the optimal amount of value.
- This map highlights (via dark green) where the strongest growth opportunities currently are (as of 2010).
-
- This global market is characterized by faster communication, transportation, and financial flows, all of which are creating new marketing opportunities and challenges.
- Oxford University Press defines global marketing as "marketing on a worldwide scale reconciling or taking commercial advantage of global operational differences, similarities and opportunities in order to meet global objectives. " The global economy certainly provides advantages to companies wanting to increase revenues and expand their brand.
- For example, cost of product development (produced locally or imported), cost of ingredients, cost of delivery (transportation, tariffs, etc.), and other variables will determine product pricing.
- Product positioning, including whether the product is high-end, low-cost, or middle ground, compared with competing brands also influences the ultimate profit margin.
- Likewise, a low-cost product in France would find limited success in an expensive boutique.
-
- The product life cycle (PLC) describes the life of a product in the market with respect to business/commercial costs and sales measures.
- Product sales pass through distinct stages, each of which poses different challenges, problems and opportunities to its parent company.
- However, this stage also offers its share of opportunities.
- High costs due to initial marketing, advertising, distribution and so on.
- Little or no profit is made owing to high costs and low sales volumes
-
- Marketers (and businesses) must start seeing packaging as an investment, not a cost if they want to remain competitive.
- If cost was always a factor, disposable pepper grinders might never have made it to the shelves.
- The simplest packaging changes can yield great opportunities for a brand.
- Research at the beginning of a launch, re-positioning or development process can really give your product the opportunity to shine.
- This ignores the opportunity to be more strategic in approaching packaging.
-
- Cost-based pricing is the act of pricing based on what it costs a company to make a product.
- Cost-based pricing is the act of pricing based on what it costs a company to make a product.
- Price = (1+ Percent Markup)(Unit Variable Cost + Average FixedCost) .
- A company must know its costs.
- Cost-based pricing is misplaced in industries where there are high fixed costs and near-zero marginal costs.