Eco 561 Business Proposal V2

Topics: Marginal cost, Costs, Variable cost Pages: 5 (1586 words) Published: March 18, 2013

Business Proposal Paper
Ronald S. Albergo
ECO 561
Kevin McKinley

Within any industry the fiscal or economic goals are to increase revenue; determine the fixed and variable costs for the business; and determine how to maximize profit. In order to reach those goals an organization needs to establish the pricing structure, product differentiation, and how to minimize the costs for the product. In this proposal will layout the strategies to reach those goals in order to make a more economic successful organization. Company Background

A sound prediction made by the organization is, in the very near future, society will be moving exclusively to digital. Books, news, magazines, TV shows, and movies the boom in digitalization will be grand and swift. Seeing a market for a unique form of digitalizing books and magazines the organization created a technology that allows for the printed word to be converted into a file that can be read digitally or listened to with a realistic sounding synthetic voice. The organization patented the technology and is currently competing against other organizations that offer similar services. The main competitor lies in an organization known as books on cd. This places the organization in monopolistic competition, which is, “characterized by a relatively large number of sellers producing differentiated products.” (McConnell, Brue, & & Flynn, 2009, p. 177) Currently, the organization is run out of a small venue, and many of the employees are still gainfully employed with other organizations. The organization has identified that assistance is required but is unsure of how or where to employ the required assistance. The organization would also like to identify the appropriate price to be selling their product at.

Increasing Revenue
Currently, the organization is charging $10 for older titles whose copyrights have lapsed and $15 for titles that have royalty fees. Furthermore, the organization is selling twice as many new titles as older titles. One strategy for the organization is to lower the fee for the older titles to $8, since there are no royalty fees for to pay, and increase the price for books that are in high demand, to $16. If the organization was to sell 1,000 older titles at the new pricing the total revenue (TR=PxQ) would be $8,000, and if the organization were to sell 2,000 of the newer titles the total revenue would be $32,000. (McConnell, Brue, & & Flynn, 2009, p. 116) With this change in prices, the organization could expect to sell more of the older books at the lower cost, which would increase revenue over time. It also could experience very little change in sales of newer books with the small $1 increase in price, especially considering the demand. By monitoring the consumers response to the changes in price (known as price elasticity), the organization can see how consumers are responding to the changes in pricing and adjust accordingly. (McConnell, Brue, & & Flynn, 2009, p. 114) One market that the organization could benefit from is online. While the organization has already started building a low cost website which describes and offers the product for purchase; the full potential for this type of product is not being reached. The organization should create an online store, perhaps on a site such as EBay. A basic EBay store costs $15.95 a month to operate and a percentage fee based on the amount of sales made each month. (Fees For EBay Stores, 2013) Using technology to sell the product makes the most sense and can be done for a relatively low cost. However, there are costs the organization needs to consider before putting the product in more locations for customers to purchase it. If the demand increases, the organization may consider hiring additional help. One way to keep the labor costs down is to hire college students as interns to help with the translations and assisting customers. Often students look for low...
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