All managers want to know how profits will change as the units sold of a product or service change.
Home Depot managers, for example, might wonder how many units of a new power drill must be sold to break even or make a certain amount of profit. Procter&Gamble managers might ask themselves how expanding their business in Nigeria would affect costs, revenues, and profits. These questions have a common what-if theme: what if we sold more power drills? What if we started selling in Nigeria? Examining the results of these what-it possibilities and alternatives helps managers make better decisions.
Managers must also decide how to price their products and understand the effect of their pricing decisions on revenues and profits. The following article explains how the lrish rock band U2 decided whether if should decrease the prices of some of its tickets during a recent world tour. Does lowering ticket prices sound like a wise strategy to you?