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Pricing Structure In Virgin

To begin with, the price structure forms part of the objectives structure of the company. This ensures that the price policy and the price strategy serve the business objectives, which will avoid suboptimisation resulting from possible conflict between the business objectives. Secondly, the profitability of the enterprise represents the top level of the price objectives structure. All other possible alternative price objectives structures are arranged as part of the price objectives structure on levels lower than the profitability of the enterprise.

The profitability of the enterprise is thus the comprehensive price objective that should be applied in the long term. The other possible alternative price objectives are arranged according to the same criteria used to arrange the objectives of the enterprise. In the last instance attention is drawn to the fact that the profitability of the enterprise is base on profit and capital requirements. Profit is the residue between sales and cost where sales equal price time’s quantity and where cost could have various sources and classifications.

The capital equipments, refers to direct, indirect fixed and variable. The source for example, refers to vided according to the need for fixed and current capital and is classified into the categories of direct and indirect fixed capital and direct current capital. It is important to note that the single-product enterprise, which manufactures and markets one product only, is the exception rather than the rule, and that sales, cost and capital requirements, which from the basis of the profitability of the enterprise, usually result from various types of products marketed by the enterprise.

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