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Costs Set the Price Floor

Costs Set the Price Floor

A business must understand its costs before setting a sustainable price. If the price is below the average total cost per unit, the business makes a loss per unit on an average-cost basis. However, if the price is above the average variable cost, each additional sale can still contribute toward fixed costs and reduce the business's total loss in the short run.

2.2.2b Influences on pricing strategies Lesson

  1. GCSE
  2. /Business
  3. /2.2.2b Influences on pricing strategies

Step-by-step lessons on Edexcel GCSE Business 2.2.2b Influences on pricing strategies. Each one builds up to exam-style questions. Start by mastering business terminology and the functional areas (marketing, finance, operations, HR) before moving on to the extended, evaluation-heavy questions that carry the most marks.

Lessons