Final answer:
To determine the suggested selling price for Sonya's product, which costs $6.82 with marketing expenses of $1099, Sonya must consider the production and marketing costs, desired profit margin, competition, and market demand, and calculate a price that covers costs while ensuring profit.
Step-by-step explanation:
Sonya's suggested selling price for a new product that costs $6.82 and has marketing costs of $1099 would require a detailed analysis of various business factors. This analysis can include consideration of the product's cost, the marketing expenses, the target profit margin, competition pricing, and market demand. In order to determine the suggested selling price for Sonya's product, she would have to reflect on these elements and decide on a price point that not only covers her costs but also ensures a reasonable profit.
For instance, if Sonya aimed for a profit margin on her product, she would have to add this desired margin to the sum of the production cost and the marketing expense. Given that different industries and products have different typical profit margins, picking the right margin is crucial. For illustration, in the case of the t-shirt company Coolshirts selling t-shirts at $9 each, if the production and marketing costs were significantly lower than the selling price, they would be making a profit. Alternatively, in a scenario where a firm wanted to break into a market where the product cost was $10 and selling at $11, the new firm would have to ensure that its selling price is competitive while still covering costs and allowing for a profit. This strategy can extend to other commodities and markets, such as the pricing strategies adopted by firms for competitive markets, reported in your provided data.
To further actualize the pricing process, one could follow the process of rounding to the nearest penny, as demonstrated in the reference to rounding $6.375 to $6.38, then adding the original price to determine the final selling price inclusive of sales tax. Lastly, an understanding of price elasticity, evidenced in the mention of an elasticity of 1.4 indicating a price drop may be advisable, is another critical component in determining the optimal selling price for profitability and competitiveness in the market. Using these concepts and strategies, Sonya can effectively calibrate her selling price to align with her business goals and market conditions.