Price elasticity of demand on revenue.

Price elasticity of the demand is a fundamental principle that improves revenue collection. A price elasticity of demand is a measure of how a small change in the price or demand of a product/service can result in changes in that item’s demand. Price elasticity of desire is a way to increase revenue. To achieve this goal, the demand must be completely elastic. This means that even a small price change will not have any effect on how much people consume. Price levels must be adjusted if demand is not elastic at initial quantities. Prices will have no impact on how much the product is needed. For price elasticity of demand to have a positive effect on revenue, customers must need the product (Hubbard & Patrick 2019). Customers will buy products or services regardless of their price because they have a desire for them. The proposed pricing structure is a two-tiered price structure, $5 for kids under 12, and $10 for adults. Because cinemas are an attractive destination for people seeking entertainment and often a source of addiction, this pricing strategy will help increase income for movie theatres. Based on the two-tier pricing strategy, price elasticity will be divided into two segments. Customers will want more services if they are less expensive. It will lead to a higher income as a result of the greater demand for services. Perfect demand elasticity means that even a slight price change will cause a larger change in service quality. Thus, even a slight price reduction will increase the demand for the service and result in higher income. As such, children aged 12 and under are charged a lower price than ever before. There will be an elastic increase in demand for tickets to children’s movies as more children go to the cinema. Brand loyalty can also have an impact on price elasticity of demand. One customer might choose to buy and consume products from a particular brand. The price of the product will affect the demand. Theaters will see a rise in their customers’ loyalty, which will help them to increase their services demand. An increase in price could also signify an improvement of the quality of services. A modest increase in price will usually result in loyal customers increasing their request for services. Consumers will continue to buy the same amount of tickets, even if they are more expensive. Their shopping habits will not change if the price drops. A price rise will eventually result in an increase in total revenue and sustain the revenue growth objective.

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