Marginal Analysis as a Tool for Socially Responsible Profit Maximization in the Process of Pricing

Abstract:

Maximizing companies' profits should be a process of looking for ways to increase profits without placing additional burdens on consumers or the environment from overproduction and waste. In this way, the socially responsible company must constantly analyze its own processes to ensure higher efficiency to increase potential profits. As part of the pricing process, certain pricing decisions can be made that have an impact on profit itself more than any other activity associated with shaping the final price for customers. By using marginal analysis, it is possible to maximize profits in the pricing process and thus prevent excessive production and waste of resources, which would lead to social irresponsibility of the company. The primary goal of this work is to apply marginal analysis in the process of creating the price of the company's product, ie to determine the sales volume at the optimal price to achieve the highest possible profit. Within this work, methods of information and data collection, method of excerpting, synthesis, analysis, and comparative analysis, method of explanation, induction, and deduction were used, and methods of one-dimensional descriptive statistics are used for the graphical display of analysis results. Based on the performed marginal analysis, we proposed to the company a specific volume of production at the optimal price and maintaining the highest possible profit. Using graphical processing, the presented analysis can serve companies in all areas of the business as an aid in maximizing profits on their own.