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    coconn's Avatar
    coconn Posts: 1, Reputation: 1
    New Member
     
    #1

    Nov 30, 2016, 12:52 PM
    Pricing Discount Question
    Was wondering if there are any theories in regards to something I am encountering.

    For example, there is a 100 of a product that sells for $100, and that item is discounted until the full supply runs out. So, if on the first day, 0 people buy the item, the price goes down to $99. Conversely, if 50 people buy the item on day 1, it may increase price to $110. If this price is too high, it will drop.

    What I am trying to determine is the following:
    What sales were "lost" revenue. IE- Someone bought at $99 but more than likely would have purchased at $100
    vs.
    What sales were "gained" sales: IE - Someone bought at $95, but would have considered $100 too expensive.

    I'm not sure if such a theory exists, but I would assume it would have to do with the quantity sold at each price, which I obviously have the information on.

    Please let me know if anyone has thoughts on this.
    paraclete's Avatar
    paraclete Posts: 2,704, Reputation: 171
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    #2

    Dec 1, 2016, 10:04 PM
    There is a theory about the point of indifference for example if you make a penalty of $5 and don't get the desired result where is the point of indifference beyond which you will get the desired result. The same thing here if $100 results in no sales it must be beyond the point of indifference but then you haven't dealt with the competitive products, what is their price point and where is the indifference to the difference in price and or quality. You cannot assume perfect elasticity that would allow a price rise on day 2

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