Gross Margin, Gross Profit and the Price Elasticity of Demand

Low gross margin can predict failure. High gross margin increases the odds of superior profits. A company’s gross margin is the weighted average gross margin of its products. The easiest way to change a company’s gross margin is to focus on products with a low, zero or negative gross margin. The temptation might be to simply discontinue these products. A better alternative is to consider whether a product can be repriced to improve gross margin and gross profit.Raising price reduces demand based on a product’s price elasticity. Academic articles on price elasticity tend to employ calculus and statistics that are beyond the skill of the individuals who actually make pricing decisions. The contribution of this article it is to provide a clear, simple means of identifying a price point that maximizes product gross profit considering unit cost and the price elasticity of demand.

Underpricing Luxury: When a Lower Price Results in Higher Reputation

Determining the price point is a vexing problem for firms: price too high and there is no market, but price too low and money is left on the table. Complicating matters further, for many goods there is a secondary market where products can be resold following the initial sale by the firm. Here, the open market determines the price point that end consumers pay. Often that price is higher than the price offered by the firm for goods such as premium handbags, wine, high-end watches, and works of art, so the consumer will see the product’s quality or appeal validated by the market, which leads to a reputation gain for the firm. This phenomenon goes beyond physical products and includes a variety of services, such as live concerts, as reflected in their ticket prices in primary and secondary markets. However, the secondary market can also offer a lower price than the firm’s original offering, which hurts the firm’s reputation. Typically, the luxury market equates higher prices with higher status but neglects the impact of the secondary market. Our research considers the case where initially underpricing a good may be in a luxury firm’s long-term interest. Although underpricing has been used in initial public offering (IPO) markets to increase the firm’s reputation, it has been viewed as a problem or discouraged in other market industries. Our hypothesis is that reputation has long-term value for firms and, in industries where a visible secondary (i.e., resale) market exists for products, price increases after product release lead to gains in reputation as higher resale prices signal quality and value.

Will Households Invest in Safe Sanitation? Results from an Experimental Demand Trial in Nakuru, Kenya

Unsafe sanitation is an increasing public health concern for rapidly expanding cities in low-income countries. Understanding household demand for improved sanitation infrastructure is critical for planning effective sanitation investments. In this study, we compared the stated and revealed willingness to pay (WTP) for high-quality, pour-flush latrines among households in low-income areas in the city of Nakuru, Kenya. We found that stated WTP for high-quality, pour-flush latrines was much lower than market prices: less than 5% of households were willing to pay the full costs, which we estimated between 87,100–82,900 Kenyan Shillings (KES), or 871–829 USD. In addition, we found large discrepancies between stated and revealed WTP. For example, 90% of households stated that they would be willing to pay a discounted amount of 10,000 KES (100 USD) for a high-quality, pour-flush latrine, but only 10% of households redeemed vouchers at this price point (paid via six installment payments). Households reported that financial constraints (i.e., lack of cash, other spending priorities) were the main barriers to voucher redemption, even at highly discounted prices. Our results emphasize the importance of financial interventions that address the sizable gaps between the costs of sanitation products and customer demand among low-income populations.

Analysis of Third Rail Condition and Performance With a Data Acquisition Suite

Third rail systems must be properly maintained to ensure trouble-free reliability. With limited maintenance resources and track maintenance windows, much of third rail maintenance is reactive. Most would agree that fixing problems when they arise is no way to run a railroad. A properly configured and implemented third rail analysis system enables maintainers to adopt a targeted Preventive Maintenance (PM) approach to the third rail. By pinpointing potential problems, maintainers can focus their valuable resources on the most critical conditions and locations before service is affected. The relatively low price point for sensor and processing technology has fostered the development of cost-effective tools for the analysis of third rail systems. Multi-channel data acquisition devices allow for simultaneous capture of a dozen or more variables with total sampling rates in the GHz range. Superimposing this data on train position creates a detailed and precise system condition map. In addition to mapping third rail condition for PM activity, this technology can also be used to verify and correct system condition at commissioning, thereby establishing a baseline of system condition for future analysis. Data such as collector shoe impact, voltage variation, and current level is captured and can be compared with periodic analyses to identify trends in third rail condition. This paper examines the configuration and use of a third rail analysis system for both legacy and greenfield applications. The author steps through system architecture, data analysis, and several case studies of how the data was used to identify and locate problems that compromised system reliability and efficiency. Modern power rail analysis technology offers significant benefits to installers and maintainers.

Phantom Demand and the Sake Market

This article examines sake consumption patterns in Hong Kong and reports on a study that seeks to determine if the market can be grown. Hong Kong is one of the major export markets for sake, driven largely by the popularity of Japanese restaurants. The Japanese Export and Trade Organizations (JETRO) is looking at ways to expand consumption as a means of overcoming the decline in sake sales in Japan. This study presents a cautionary tale of market research, for on the surface the study reveals the market could grow by at least 25%, and more importantly, the current price point is below what consumers are willing to pay. However, closer examination of the results suggests a much smaller growth potential for most of the people who consume sake do so once a month or less and usually in a restaurant setting. Increasing sales will require a change in overall dining and drinking behavior patterns, which will be difficult to achieve.

Environmental struggles in Aboriginal homelands: Indigenizing conservation in Australia

Many large remaining areas of high conservation value currently lie within Indigenous homelands. The attempts of conservationists to protect such areas from industrial development sometimes come into conflict with the contrary wish of Indigenous populations to benefit from such development. How, in such cases, can the claims of Earth communities to ecological justice be reconciled with those of Traditional Owner communities to Indigenous justice? The dilemma is here examined via a case study, that of a proposed natural gas installation at James Price Point in the far north of Western Australia. It is argued that resolution of the dilemma may require a significant re-visioning of conservation: environmentalists might need to concede to Aboriginal communities the moral ownership of conservation per se, at least in so far as it applies to Aboriginal homelands, and perhaps more widely.

Competitiveness of a low specific power, low cut-out wind speed wind turbine in North and Central Europe towards 2050

This work is part of an ongoing study, creatively named the "LowWind Project", which is a collaborative effort between DTU and industry to design and eventually implement a 3.4 MW 100 W/m^2 low wind (LW) turbine with a hub height of 127.5 m, a rotor diameter of 208 m, and a cut-out wind speed of 13 m/s. This paper investigates at what price point this LW turbine becomes competitive in Northern and Central Europe's energy system, as well as what impact the introduction of this technology has on the system. Similarly, the impact system flexibility has on LW investment is also analysed by limiting future transmission investment. Furthermore, this paper also analyses the amount of revenue this LW technology could generate compared to conventional turbines to further investigate the business case for this technology. The main finding here is that this LW technology begins to see investment at a 45% price increase over a conventional onshore wind turbine with an equal hub height (127.5 m) and a smaller rotor diameter (142 m vs 208 m). The addition of LW technology also leads to a reduction in transmission investment, and similarly, reductions in transmission capacity lead to further investment in LW technology. Lastly, it is shown that in the future Northern and Central European energy system, in wind dominated areas such as Denmark, this LW technology could generate revenues that are more than 120% higher than conventional turbines (per MW), making the case that this technology could be a worthy endeavor.<br>

Competitiveness of a low specific power, low cut-out wind speed wind turbine in North and Central Europe towards 2050

This work is part of an ongoing study, creatively named the "LowWind Project", which is a collaborative effort between DTU and industry to design and eventually implement a 3.4 MW 100 W/m^2 low wind (LW) turbine with a hub height of 127.5 m, a rotor diameter of 208 m, and a cut-out wind speed of 13 m/s. This paper investigates at what price point this LW turbine becomes competitive in Northern and Central Europe's energy system, as well as what impact the introduction of this technology has on the system. Similarly, the impact system flexibility has on LW investment is also analysed by limiting future transmission investment. Furthermore, this paper also analyses the amount of revenue this LW technology could generate compared to conventional turbines to further investigate the business case for this technology. The main finding here is that this LW technology begins to see investment at a 45% price increase over a conventional onshore wind turbine with an equal hub height (127.5 m) and a smaller rotor diameter (142 m vs 208 m). The addition of LW technology also leads to a reduction in transmission investment, and similarly, reductions in transmission capacity lead to further investment in LW technology. Lastly, it is shown that in the future Northern and Central European energy system, in wind dominated areas such as Denmark, this LW technology could generate revenues that are more than 120% higher than conventional turbines (per MW), making the case that this technology could be a worthy endeavor.<br>

Case study of a food relief grocery model: The Neighborhood Pop-Up Grocery Project

In Austin, Texas, Sustainable Food Center, in partnership with Foodshed Investors and the city of Austin, responded to the COVID-19 crisis with a mini-grocery pilot project. The Neighborhood Pop-Up Grocery Pilot Project engaged local restaurants to serve as points of access for fresh and affordable food. This model served as both a food-access and supply-chain solution, utilizing partnerships with local farmers and distributors to source food for Austin communities and restaurant partners in order to provide the food at an affordable price point. This case study outlines the novel model and describes three key takeaways from this 2020 pilot project.