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Price increases and decreases 2009-09-02
From craig:
I work for an industry that bases it price increases and decreases on commodity pricing - Customer get confused on how/why we calculated new prices due to movement in the market - Price go up x% for every $10 of movement in the market -

For this example-
Movement went down by $30 and it is 2% for every $10 - so price decrease was 6%.
Customer's price is currently $100.
We say - $100/1.06= new price of $94.3
Customer says - $100*.94= new price of $94.

They don't understand that if board went back up $30 which would be 6% increase, they wouldn't be back at $100 if they multiplied on the price decrease.
$94*1.06=$99.64 vs. $94.3*1.06=$100 (Back to the original price)

What is the best way to explain to customer besides using this example?

Any help or info is appreciated.


Answered by Victoria West.



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