Will Bury's Price Analysis

Will Bury’s Price Elasticity Evaluation
Revenue is defined as the amount of income that a company receives from the sales of their products or services and is largely affected by the price of the product or service. Whenever there is a price change, there is a direct effect on the business’s revenue. In the case of Will Bury’s audio book business, changes in any aspect of his business or cost structure such as fluxuating costs of production, additional staff, substitution of products, various fees incurred during production or changes in the market will alter his cost and revenue structures. The higher the cost of production is for the product, the higher the cost the product will be for the consumer. As Mr. Bury contemplates hiring someone to assist with the digitizer, he must keep in mind that hiring an employee will have a negative effect on his profit because he would have to lose hours training as well as pay this person.  
The price elasticity of demand for Will’s product is going to determine the effect of price changes on the quantity that will be demanded. Price elasticity of demand measures the rate of response due to a price change (Moffatt, 2009). Because this is a product that isn’t essential to survival, Mr. Bury’s product is relatively elastic and sensitive to price changes. “All else equal, as price falls, the quantity demanded rises, and as price rises, the quantity demanded falls’ (McConnell, 2004, p.40). Elasticity plays a major role within this business. The purpose of Will Bury’s product is for consumers to hear digitalized text within a synthetic voice which will allow customers to hear a more lifelike audio. Currently there are many substitutes on the market including tape recorders, books on CD’s and DVD’s, satellite radios and other informational sites on the internet that offer similar items. Audiobooks are largely considered a luxury and therefore price elastic. For Will, setting his product apart from competition is the driving force...