Price & Cost Tables

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The simulator can report Revenues and Costs for products specified in market simulations.  Use the Price & Cost Tables dialogs to compute revenues and costs for calculations.

 

Specifying Prices (to the Consumer): (Only applies to product searches)

 

In most situations, product search will apply the price (or range of prices) you specify in the product specification grid for computing revenues and profits.  However, especially when searching for optimal share of preference, you may want to override (add to) the price by specifying prices per attribute.  If you associate incremental prices with attribute levels, then a searched product with enhanced features will be assigned a higher price that is computed by summing across the attribute pricing tables plus any base price you may have specified in the product specification grid.

 

Add prices per attribute level... (Only applies to product searches)  This allows you to specify prices (to the consumer) per separate attribute. When the simulator computes the price to use for a searched product, it adds the price it finds in the product specification grid to any prices it finds in the prices table.  (You do not have to associate prices with every attribute.)

 

Add conditional prices for multiple attributes... (Only applies to product searches) This allows you to specify prices (to the consumer) for combined attributes (such as brand x size combinations) to be used in product searches.  Use this if the prices for one attribute depend on the levels of a different attribute.  When the simulator computes the price to use for a searched product, it adds the price it finds in the product specification grid to any prices it finds in the prices table.  

 

Specifying Costs (to the Producer):

 

To compute profits, the simulator needs to know how much each product costs (to the producer) per unit.  You can specify per-attribute incremental costs, or conditional costs that depend on combinations of multiple attributes taken together.

 

Add costs per attribute level...  This allows you to specify costs (to the producer) per separate attribute.  The total cost of a product (to the producer) is calculated by adding the costs of the separate attributes.  (You do not have to associate costs with every attribute.)

 

Add conditional costs for multiple attributes...  This allows you to specify costs (to the producer) for combined attributes (such as brand x size combinations).  Use this if the costs for one attribute depend on the levels of a different attribute (a pricing dependency).

 

Costs need not be fixed; you can use logical expressions to specify costs that depend on other aspects of the solution, such as share.

 


Computing Revenues and Profits:

 

Total Revenues are calculated as Share x Market_Size_in_Units x Price .  

 

Profits are calculated by subtracting Total Cost from Total Revenues, where Total Cost is equal to Share x Market_Size_in_Units x Cost_per_Unit.

 

Page link: http://www.sawtoothsoftware.com/help/lighthouse-studio/manual/index.html?pricinginfowindow.html