Business Proposal Essays

1430 Words Jun 28th, 2012 6 Pages
Business Proposal

Week 4

LaKeeta Seals

University of Phoenix

Samuel Imarhiagbe/Instructor

February 29, 2011

Abstract

Will Bury, an enterprising inventor, is convinced that soon everyone will be reading or listening to everything digitally, including books that have been mostly available in hard copy. He knows that there are books on CD, but these are relatively expensive and have been recorded using human readers. He also knows that there is technology that can transform the printed word into audio, but the sound is somewhat inhuman. Will plans on speeding up the transformation with a proprietary technology he has developed and patented. This technology takes the printed word for text materials and creates a
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Bury must determine the optimal price using the formula “MC = MR” (marginal cost equals marginal revenue). The profit maximizing quantity is the total revenue – total cost method. This relies that profit equals revenue minus cost. Producing more digitized books will produce more revenue. A larger option of different titled books for customers raises the total revenue.

Marginal Cost and Marginal Revenue

“Marginal revenue is the increase in revenue from selling one more unit of a product” (Pietersz, 2012 p.89). “The marginal cost of an additional unit of output is the cost of the additional inputs needed to produce that output” (Econ Model, 2012). The marginal cost of each unit is the difference in ATC per unit. As an easy example: If the first 100 units cost $1000 and the 101st unit cost an additional $15, the marginal cost of the 101st unit is $15. An increase in output will always raise profit as long as marginal revenue is greater than marginal cost. This concept can somewhat be applied to this business because to achieve maximize profit different books need to be produced, so there will always be one more unit of the good. However, that one more unit will keep on growing because there will be a constant need to digitize different books. This gives the customers more options to choose from, especially when new books are released.

Pricing and Non-pricing Strategies

Will Bury

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