Pricing vs Revenue

Lesson Content

• Lesson Plan Template:

  CTE Lesson Plan

• CTE Course Info and Benchmark Notes

  
  

  Program Title: Marketing, Management and Entrepreneurial Principles

  Course Title: Business Ownership

  Course Number: 8812000

  Career Cluster: Marketing, Sales & Service

  CIP Number: 0252140103

  Course Type: CAR-PREP - High School Career Preparatory Program

  CTE Standard(s) or benchmarks

  • CTE-MKT.912.8812000.11.1 focus Identify the elements and reasons for developing of a pricing strategy and how it affects the profitability and sustainability of a business

  Integrated benchmarks: ELA or Other:

  • ELA.10.C.4.1 supporting Conduct research to answer a question, refining the scope of the question to align with findings and synthesizing information from multiple reliable and valid sources.
  • SC.912.CS-PC.3.3 supporting Conduct research using peer reviewed articles, newspapers, magazine articles, and/or online books.
  • ELA.12.C.4.1 supporting Conduct research on a topic issue to answer a question and synthesize information from a variety of sources.

• Unit Outline

  
  

  This lesson is designed to be used with the case study, “How Much for a Cup of Coffee?” See CPALMS resource ID#215694.

• Career Connection

  
  

  In this lesson, students will encounter various pricing structures, such as value and prestige pricing, and explore the different scenarios in which they are employed. They will gain an understanding of the concept of pricing versus revenue. Students will develop and use critical knowledge skills, including critical thinking, problem-solving, reading comprehension, and analyzing. Additionally, they will enhance their relationship skills by sharing ideas, engaging in teamwork, and collaborating effectively.

• Learning Objectives

  
  

  Students will be able to:

  • identify the difference between a low- and high-price strategy.
  • analyze and explain how a pricing strategy can affect profitability.

• Prior Knowledge

  
  

  Students should be familiar with/able to:

  • collaborate in a group
  • research online business trends and data online
  • understand the following general business terms:
    • sales volume, revenue, profit/profitability
  • understand the following pricing-related concepts:
    • pricing structure, pricing strategies, value pricing, prestige pricing
  • understand the following cost-related terms:
    • wholesale vs retail, overhead, fixed vs variable costs

• Guiding Questions

  
  
  • What are potential advantages and disadvantages of using a low-price strategy vs. a high-price strategy?
  • How can a business determine the most profitable pricing strategy for its product?

• Procedure

  
  
  1. To begin the lesson, engage students in a discussion about athletic footwear; that is, the types of sneakers they buy or are interested in. Focus on the fact that there are high-end and low-end athletic shoes.
  2. Have the students read the CPALMS case study "How Much for a Cup of Coffee?," in which they will encounter a business situation at a coffee shop business in which the owners need to decide on a pricing structure. Ask students to annotate and highlight the text as they make connections to the guiding questions and prepare to research pricing structures in other industries.
  3. Have students discuss the case study as a class, using the following questions to generate engagement on the concepts of pricing and revenue if needed:
     • How can different pricing structures affect the profitability of a specific product?
     • How might a lower-priced product be perceived?
     • How might a higher-priced product be perceived?
     • How might a lower-priced product be more profitable?
     • How might a higher-priced product be less profitable?
  4. Have students decide as a class which direction on pricing the owners should take. Ask for a show of hands for who believe Isobel or Christina has the right approach. Ask students to share out their reasoning with the class. Remember there is no right answer.
  5. Have students individually complete the Pricing vs. Revenue handout (see attachments) to transfer knowledge to other industries, researching other industries with both value and higher pricing options. Students will need to research online using business publications and trade association websites to find answers. Provide adequate time to complete.
  6. Ask students to share their experiences with other examples of products with both value and higher pricing options. They can share what they have learned from their research along with any other knowledge they have obtained previously.
  7. To bring the lesson to a close, have students complete a 3-2-1 exit ticket. Review the guiding questions and remind students of the opening discussion on athletic shoes, the case study, and their own research on other industries. Students should answer:
     • 3 things they learned
     • 2 things they liked or found interesting
     • 1 thing they still want to know

• Teacher Notes

  
  

  As you approach this lesson, keep in mind that students may not have an understanding of how revenue goals and marketing choices can affect pricing structures. Many people assume all products use cost-based pricing rather than revenue-based pricing. This lesson can be used as a springboard for multiple in-depth discussions in related areas.

  Note that there is no correct pricing structure. Either low-end or high-end pricing could be more profitable in different scenarios.

  For the research component, give students the time needed to research online for pricing structure information for the various industries listed in the handout. Keep in mind that this is not simply an "Ask Google" type assignment.