2 Market Changes and Project Value Free Online FlashCards

What does net price per unit mean?

Net price is the amount actually received per unit after discounts, rebates, refunds, and similar adjustments.

What is a movement along the demand curve?

A price change generally changes the quantity customers demand, holding other factors constant.

What does a shift in demand mean?

A demand shift means customers would buy more or less at a range of prices, often because preferences, incomes, population, or substitutes changed.

How can market size and adoption affect expected sales?

A larger addressable market or faster adoption can increase expected sales; a smaller market or slower adoption can reduce or delay them.

How do purchase frequency and retention affect recurring revenue?

More repeat purchases or lower churn can raise recurring revenue; reduced usage, delayed repurchases, or higher churn can lower it.

Why does customer mix matter to a project forecast?

A shift toward higher- or lower-value customers changes average sales and may also change service or selling costs.

What evidence can test customer demand?

Interviews, purchase and renewal behavior, sales pipelines, market data, and carefully designed tests can help. Distinguish current interest from willingness to pay and repeat purchase.

How can competition change a project’s outlook?

New competitors, expanded capacity, or improved substitutes may reduce sales or prices and raise marketing or service costs. Competitor exits, differentiation, or loyalty may support sales or prices.

What does price elasticity of demand measure?

Price elasticity of demand measures the percentage change in quantity demanded associated with a percentage change in price.

How can elasticity affect revenue after a price increase?

With elastic demand, a price increase can reduce quantity by a larger percentage and lower revenue. With inelastic demand, quantity falls by a smaller percentage, so revenue may rise.

A 5% price cut and 8% unit-sales decline: what happens to revenue from $500,000?

Revenue falls from $\$500{,}000$ to $9{,}200 \times \$47.50 = \$437{,}000$, a $12.6\%$ decrease. The price and unit-sales declines compound.

Besides revenue, what can market changes alter in a project forecast?

Market changes can alter variable costs, customer-acquisition expenses, staffing, capacity, working capital, and growth investment—not just sales.