T31- Sales, revenue and costs

• What are terms used for sales?

  • sales
  • revenue
  • income
  • turnover
  • takings
• Sales revenue = price x quantity output
• total revenue = volume sold x average selling price
• how to increase revenue?

  increase quantity sold:

  - cutting price or offering volume related incentives

  - demand sensitive to price?

  achieve a higher selling price:

  • simply increase the price
  • market research to suggest whether price is high enough or too low
• What are variable costs?

  costs which can change as output varies

  lower risk of start-up, no sales = no variable cost
• what are fixed costs?

  • costs which do not change when output varies
  • fixed costs increase the risk of a start-up
• what are examples of variable costs?

  • raw materials
  • brought in stocks
  • wages based on hours or amount produced
  • marketing costs based on sales
• what are examples of fixed costs?

  • rent and rates
  • salaries
  • advertising
  • software
  • design and development
  • insurance, banking and legal fees
• total costs = fixed costs + variable costs