MNE3701
ASSIGNMENT 4 SEMESTER 2 2024
UNIQUE NO.
DUE DATE: 11 OCTOBER 2024
, MNE3701
Assignment 4 Semester 2 2024
Unique Number:
Due Date: 11 October 2024
Entrepreneurship and Small Business Management
Question 1
Applying a Pricing System in a Bakery Business
Introduction
Setting the right prices for products is one of the most critical decisions for any small
business, especially in a competitive industry like baking. Pricing not only impacts sales
and profitability but also shapes customers’ perceptions of quality and value. For a new
bakery, effectively implementing a pricing system is essential for attracting customers
while ensuring financial viability. This essay explores various strategies for applying a
pricing system in a bakery, including understanding costs, competitor analysis, value-
based pricing, promotional pricing, psychological pricing, adjusting prices based on
feedback, and seasonal pricing.
Body
Understanding Costs
The foundation of a solid pricing strategy begins with understanding the costs
associated with running the bakery. Costs can be categorized into direct and indirect
expenses. Direct costs include ingredients such as flour, sugar, and eggs, while indirect
costs encompass rent, utilities, and labor. For instance, if the weekly expenses total
$500, including $200 for ingredients and $300 for rent, this figure will serve as a
baseline for determining pricing. A comprehensive understanding of these costs
ensures that the bakery can cover its expenses and still generate profit.
ASSIGNMENT 4 SEMESTER 2 2024
UNIQUE NO.
DUE DATE: 11 OCTOBER 2024
, MNE3701
Assignment 4 Semester 2 2024
Unique Number:
Due Date: 11 October 2024
Entrepreneurship and Small Business Management
Question 1
Applying a Pricing System in a Bakery Business
Introduction
Setting the right prices for products is one of the most critical decisions for any small
business, especially in a competitive industry like baking. Pricing not only impacts sales
and profitability but also shapes customers’ perceptions of quality and value. For a new
bakery, effectively implementing a pricing system is essential for attracting customers
while ensuring financial viability. This essay explores various strategies for applying a
pricing system in a bakery, including understanding costs, competitor analysis, value-
based pricing, promotional pricing, psychological pricing, adjusting prices based on
feedback, and seasonal pricing.
Body
Understanding Costs
The foundation of a solid pricing strategy begins with understanding the costs
associated with running the bakery. Costs can be categorized into direct and indirect
expenses. Direct costs include ingredients such as flour, sugar, and eggs, while indirect
costs encompass rent, utilities, and labor. For instance, if the weekly expenses total
$500, including $200 for ingredients and $300 for rent, this figure will serve as a
baseline for determining pricing. A comprehensive understanding of these costs
ensures that the bakery can cover its expenses and still generate profit.
