Thursday, 6 February 2014

Optimal pricing and taxing

To maximise profits you need to work out an optimal pricing strategy for your products, too much and you will not sell enough, too little and you will loose out on profit you could have made. 

There is a better opinion if it can be done and work out an optimal pricing for individuals rather than a group, so you can sell as many as you like, as long as you still make a profit and make maximum profits off each individual. 
Problems with this strategy is it's difficult to work out how to charge people differently without them feeling cheated and also find loopholes such as getting someone else to buy a item to get it at a discounted rate.

Tax
If you want to increase tax revenue without scaring away companies who can easily move operations abroad and not taxing so little to lose out on tax revenue, you can have a complex tax system were companies who have the money to move operations abroad can also use that money to decrease tax. Companies who don't really care about reducing tax revenue will not spend a lot of time, money and effort doing so but companies who do care and could move abroad will also be able to reduce their taxes and find no reason to move in the end.
Big companies who can't just move operations abroad and will unlikely move you should try harder to close tax loopholes for them.

You don't want to tax companies too much reducing competition and possible long term tax revenue and governments should try to reduce their spending by being more efficient.  


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