But this is, of course, an optimistic scenario. Let's think of other scenarios.

The new model will retail for 30,000 yen.

So let's say it's 1.05.

Well, I won't define the vehicle for you, but I will define the cost for you.

So over here let me draw a better graph than that.

Notice that the selling price is written in red.

Cost of goods sold, well that's just the cost of the goods sold.

Sell, sell, sell.

Then again for your revenue stream.

Over here, this axis right here is going to be the selling price,

And that's better than what you get out of treasury bonds.

But it's also a morally important one.

So, let's say, I cut prices below Imran because I realize this increase price strategy was kind of silly.

This is telling us that if the selling price increases, then this will become a larger negative number so we're going to sell fewer, we're gonna sell a smaller quantity.

So if the sale is twenty five percent off of x, we could say that the new price, the sale price will be x minus twenty five percent of x is equal to the sale price.

For any given price, it's going to lower the quantity demanded.

So what, how can we figure out how to maximize this profit?

It's a fantastic device that we want to get in the hands of as many people as we can.

I love Lego Mindstorm, is which a wonderful way to experiment with these things.

They want to encourage high volume purchases, and so they have stepped pricing that is oriented to create volume.

Or if we just wanted to round to the nearest penny, since we're talking about selling something, this optimal profit, this optimal profit, will happen at a selling price of 23 and 30, 23 and 33 cents.

Un bundling is just a fancy word for saying can I somehow decompose the product into separate pieces, giving some for free or if you're lucky, charging for everyone of them.

We get 30 s squared plus 1400 s minus 16000.

Let's say this was for 2008.

Ken Livingstone was reelected.

Now the East India Company would sell the surplus tea directly through hand picked consignees in America.

So the cost per cupcake is less.

And their value proposition, as even they realized later, was pretty unclear.

And they'll essentially come up with some price, which is essentially as high a price as they want do a high price because obviously as a company,

So it turns out that those fuels and technologies exist, and this is an example of that this is a solar LED light bulb that we sell for a retail price of about 10 dollars in rural Haiti.

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What do you sell?

So it makes sense for me to see if there's any maybe there's some people who want cupcakes, who can't get them because I can't produce that many.

Price depends on costs and demand.

Prices depend on the costs and the demand.

Preston promised his car would sell for 1,000.

I could actually price on specific customer segments or on features I know they need.

As you can see, roughly speaking, as the size of the house goes up, so does the sales price.

It graphs the size of the house in square feet to the sales price in thousands of dollars.

We call it a select opportunity .

And at first, maybe in 2008, they all say, you know what, this is temporary, that was just a fire sale price, and these auctions don't really reflect a market reality.

So in the last one, I touched on a little bit that the real lever that I, as the owner of my cupcake factory, can change is price.

And let's be very clear what this is telling us.

Dynamic pricing is exactly what it sounds like.