Introduction
No matter which product or service one sells, the price of the products or services achieves or breaks the financial objectives of the company. If they desire to sell to their clients without sacrificing a considerable profit margin, a meticulous pricing scheme helps a lot. No universal response is given to how high their borderline should be. Several companies charge millions of dollars, making it difficult for their target customers to afford, with others succeeding at extortionate prices (Notepirate, 2014). Ultimately, consumers choose only the services or products that match their portrayed value. So how do people determine the actual worth of what they sell over and above the production cost? Individuals can consider all the factors influencing a buyer’s desires by employing a correct price strategy.
There is no need for a sacrifice or shooting in the dark. Several price models and strategies can help to uncover how to establish reasonable prices and revenue targets for the businesses’ audiences. These strategies and tactics enable entrepreneurs to make their products more affordable whether they are entrepreneurs or pricing professionals. Additionally, pricing policies cover many of the factors of their business, such as revenue objectives, marketing objectives, target group, branding and product features. External influences such as customer demand, market trends and competitive pricing influence the experiences of the consumers (Notepirate, 2014). A new virtual wardrobe system will help users retain digital copies of purchased clothing by scanning bar codes. The application can also create, edit and share social networking outfits. It includes a feature that helps you produce custom clothes using layouts and insert them into your online wardrobe. This feature is essential for custom clothing and clothing pieces that can be incorporated by scanning.
Determination of Customer Profitability
Businesses are constantly under pressure to streamline their resource use and find ways to maximize profitability at the lowest cost and effort. As a result, management controls, such as time-based costing for activities, are used to analyze clients’ profitability to determine the amount of profit generated by each client accurately. The cost and profit information allows managers to identify strategies for those client segments that significantly affect the company’s economic returns (Notepirate, 2014). Customer profitability assessment is an essential accounting tool that deviates considerably from product profitability to individual customer profit margins. Activity-based costing examines the different cost drivers to isolate costs accurately and determine the profitability of the products.
Customer benefit analysis, by contrast, is a way of looking at different activities and costs to serve a particular customer. This is to analyze profit per customer instead of profit per product. In other words, the individual segment’s customer profitability exceeds that of SMEs. This understanding then assists an organization in its strategic choices. It can shift its focus to more profitable individual parts, attracting and retaining customers. Otherwise, it can look for cost-cutting strategies in its SME segment. It may work on redesigning its procurement process to reduce the rate of visits or commands. However, it may charge its customers for additional service visits to shift the cost distribution between businesses and customers.
Effects On Revenues and Profitability
Investing in virtual wardrobe applications will help goal-oriented companies realize increased financial output. Service companies provide a more accurate way to assign indirect costs to products. This is different compared to traditional costing methods, by investigating the cost drivers that explain the causal links between resources and activities and between activities and cost objects. There is a vast and growing clothing industry; the garment and textile industries worldwide amount to over US $3 billion (yes, a trillion) with an annual growth rate of approximately 4% (reference?). Market segments such as men’s and women’s clothing continue to grow, with annual growth of 14 percent and 12 percent (Notepirate, 2014). The cost and income of partnerships are predictable within a specific activity and then over a specified period.
The cost-volume-profit analysis (CVP analysis) attempts to detect the break-even argument for different sell volumes and cost structures. The investigation by CVP presupposes several factors, including constant sales prices and fixed and variable costs per unit. This analysis involves using several fees, costs and other equations and then drawing these variables in a financial diagram (Notepirate, 2014). The CVP formula is used for calculating the volume of sales required for cost and even break. The point of breakthrough is the units’ numbers to be sold or the volume of sales revenues to be generated so that the fees required for the product are covered. CVP’s reliability lies in its assumptions that the sale value and the gross and net costs are constant per unit. The prices are determined at a given level of manufacturing. All manufactured units are expected to be sold, and fixed costs are expected to be stable. Another hypothesis is that expense changes occur due to changes in the levels of activity. Half-variable expenses must always be split between high-low, scatter, or statistical regression expenditure classifications.
Potential Advantages and Disadvantages
The Virtual Trial Room appears to be the current craze that has significantly improved customers’ shopping experience. The virtual test room helps buyers to display several clothes while testing them. It provides a more precise concept of the customer’s clothing, which will improve customer satisfaction. The virtual testing facility is an advantage for customers and retailers alike. Customers can use the photos to test their outfits anywhere, any time, and to compare the appearances of various pieces of equipment. In this way, they can request reviews from others and deciding what to buy will be easier. On the other hand, retailers will improve their customer commitment as customers will have fun trying different styles, innovating and having fun to attract them more. As the clients have already tried it, this will result in low product returns, and no problems will arise. In the end, more merchandise sales and better brand loyalty will be provided. Vendor service providers like wardrobe planning may also offer value-added services. The app can help customer to find the products they have in their wardrobes and the goods they do not have while shopping online. The software can help customers decide on suitable equipment and accessories or color schemes.
Unfortunately, virtual dressing has some negative consequences associated. Customers can learn about the color, fabric, style, color, and other facets of fashion by surfing clothing images and evaluating the text account by showing and editing business people. Still, they cannot contact the dress directly and go through trial wear. Online customers are very concerned about the length of time they receive clothing related to logistics and logistical issues.
Conclusion
Your outfit planner is a virtual closet app that helps individuals get more out of their clothes. The majority of virtual fitting rooms use increased reality. A webcam scans the body of a person and creates a 360° 3D model in this case. Artificial intelligence (AI) is used for other virtual fitting rooms. AI uses learning algorithms and machine learning, like enhanced reality, to create shoppers’ complete 3D models willing to stand in front of the camera.
Reference
Notepirate. (2014). Cost volume profit analysis and break-even points (managerial accounting 11) [Video]. YouTube. Web.