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strategies. ) Before you make a pricing decision, you also need to know how
much gross sales and gross profits you’ll generate at each price point. So let’s
move on...
4.2.2. Line Graph #2... Gross Dollar Sales vs. Price
This line graph is the “gross sales” version of the preceding graph. It shows
you how much you can expect in gross dollar sales (units x price-per-unit) at
every price point...
The x-axis is the same as the previous graph. The y-axis shows the dollar
value of all sales that you would expect to make for every 100 survey
respondents, at each price point. This value, gross sales, is derived from the
Price-Resistance graph by multiplying the number of units sold at each price
point times that price point (i.e., that price on the x-axis).
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8 3
In this example (we are carrying the same example throughout this series of
bar charts and line graphs), you will generate the greatest total sales
dollars if you price your product at $57.
Before you make a final pricing decision, you obviously need to know how
much gross profits you’ll generate at each price point. If you’re selling a digital
good, there’s really no difference. But if you’re shipping a hard good, your cost
of production comes into play.
Without the profit graph, you could not be sure of your Perfect Price™ -- after
all, you must factor in your cost of production. If your cost of production is $60,
for example, you’d be losing money at at your “best-selling price” of $57
above!
So let’s show you the profits...
4.2.3. Line Graph #3... Gross Profits vs. Price