What We Can Afford Pricing

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What We Can Afford Pricing

What we can afford. This method tends to relegate expenditures on advertising to the bottom rung of the corporate budget ladder. It implies that whatever remains after meeting operating costs, dividend payments etc, will be spent on advertising. As with the fixed percentage of sales method, the most likely outcome is that as sales fall the unit contribution will decline to the point where no advertising can be afforded at all. Conversely, as sales rise an increasing amount will become available and wasteful expenditure may ensue.

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