Fees and Pricing (Research and Setting)
Virtual Business
Business Management & Administration
Lesson Plan
Performance Objective
The student will be able to research pricing and billing practices of a virtual business office and then
appropriately set fees for a provided virtual business office.
Specific Objective
The student is expected to research and set pricing and billing practices for a virtual business office.
Terms
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Billing–the process of generating an invoice to recover sales price from the customer
In-House Billing- done or existing within an organization
Outsourced Billing- the practice of sending all clients' billing information to a separate
company, who then handles drawing up, sending and receiving the bills.
Invoice-a list of goods sent or services provided stating the sum due for these; a bill
Purchase Order-a buyer generated document that authorizes a purchase transaction; when
accepted by the seller, it becomes a contract binding on both parties.
Billing Practices-the process a company uses to receive payment from billed/invoiced
customers
Fee-a payment made for professional advice or services
Late Fee-a monetary charge assessed on an account holder who has not made a payment on
the account by the expected due date
Billing Cycle-number of days between one invoicing period (during which invoices are
prepared and dispatched) and the next
Payment Due Date-the date when payment should be received
Outstanding Accounts-money which is owed to a company by a customer for products and
services provided on credit
PayPal™-a global e-commerce business allowing payments and money transfers to be made
through the Internet
Bank Card-a card issued by a bank for the purpose of identifying a customer
Credit Card-a plastic card issued by a bank, business, etc., for the purchase of goods or
services on credit
Market Exchange-when a seller and buyer agree on a dollar amount in exchange for a good
or service
Pricing-decided amount required as payment for something offered for sale
Direct Costs-a price that can be completely attributed to the production of specific goods or
services; refers to materials and labor/expenses
Indirect Costs-a dollar amount that can be assigned to areas such as depreciation or
administrative expenses and cannot be directly attributed to the production of specific goods or
services
Labor-the collective amount of all human physical and mental efforts used in creation of goods
and services.
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Operating Costs-ongoing operational expenses incurred by a business; these can be
referred to as operational costs and include items such as utilities, rent, and subscriptions.
Profit-the surplus remaining after total costs are deducted from total revenue, and the basis on
which tax is computed and dividend is paid
Discount/Markdown-deduction from the face amount of an invoice made in advance of its
payment.
Inflation-a continuing rise in the general price level usually attributed to an increase in the
volume of money and credit relative to the available goods and services
Odd Number-refers to setting prices just below even dollars ($9.95 rather than $10.00)
Volume Pricing-a pricing strategy that allows discounts for bulk purchases; typically, the
greater the number of units purchased, the greater the discount allowed
Unit-a definitive or determinate quantity adopted as a standard of measurement and exchange
Retail Price-the price of a good or product when it is sold to the end user for consumption and
not for resale through a third-party distribution channel
Wholesale Price-the cost of a good sold by a wholesaler (wholesaler is the middle man
between the producer and the retailer)
Variable Expense-an expense that is directly proportional to the volume of output produced.
Fixed Expense-a cost that is fixed in total for a given period of time and for given production
levels
Product Life Cycle-there are five stages of a product life cycle: Introduction, Growth, Maturity,
Saturation, and Decline. Pricing typically fluctuates due to the current product stage.
Time
When taught as written, this lesson should take approximately 150 minutes to teach.
Preparation
TEKS Correlations:
This lesson, as published, correlates to the following TEKS. Any changes/alterations to the activities
may result in the elimination of any or all of the TEKS listed.
130.120. (c) Knowledge and Skills
(3) The student develops contracts appropriate for virtual business office services provided.
The student is expected to:
(C) appropriately set fees for virtual business office services provided.
(4) The student establishes pricing, billing, and collections procedures. The student is
expected to:
(A) research pricing and billing practices of a virtual business office;
Interdisciplinary Correlations:
English-English IV
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110.34(b)(1). Reading/Vocabulary Development. Students understand new vocabulary and use it
when reading and writing.
110.34(b)(17). Students understand the function of and use the conventions of academic language
when speaking and writing. Students will continue to apply earlier standards with greater complexity.
110.34(b)(18) Students will write legibly and use appropriate capitalization and punctuation
conventions in their compositions. Students are expected to correctly and consistently use conventions
of punctuation and capitalization.
110.34(b)(19) Students are expected to spell correctly, including using various resources to determine
and check correct spellings.
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110.34(b)(12) Students use comprehension skills to analyze how words, images, graphics, and sounds
work together to impact meaning.
110.34(b)(22) Students clarify research questions and evaluate and synthesize collected information.
Occupational Correlation (O*Net – www.onetonline.org/):
Job Title: Financial Analyst
O*Net Number: 13-2051.00
Reported Job Titles: Securities Analyst, Credit Products Officer, Operational Risk Analyst
Tasks:
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Inform investment decisions by analyzing financial information to forecast business, industry,
or economic conditions.
Interpret data on price, yield, stability, future investment-risk trends, economic influences, and
other factors affecting investment programs.
Prepare plans of action for investment, using financial analyses.
Soft Skills: Critical Thinking, Judgment and Decision Making, Mathematics, Deductive Reasoning,
Inductive Reasoning, Written/Oral Comprehension
Accommodations for Learning Differences
It is important that lessons accommodate the needs of every learner. These lessons may be modified
to accommodate your students with learning differences by referring to the files found on the Special
Populations page of this website.
Preparation
 Review and familiarize yourself with the terminology, any and all website links, and any
resource materials required.
 Prepare materials and websites prior to the start of the lesson.
References
 Free Dictionary, The. (2013). Retrieved from http://www.thefreedictionary.com/
 Investopedia (US). (2013). Retrieved from http://www.investopedia.com/
 SCORE Association. (2013). Pricing Products and Services. Retrieved from
http://www.score.org
 WebFinance, Inc. (2013). Business Dictionary.
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Instructional Aids
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Lesson 3.3 Presentation
Instructor Computer/Projection Unit
Online Websites listed in the References Section
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Introduction
The main purposes of this lesson are to give students the opportunity to research and find out about
pricing and billing practices of virtual business offices, and then use that information to help them
come up with their own pricing and billing practices for a virtual business.
Ask Did you know that all companies have a pricing strategy?
Ask Did you know that all companies have a billing strategy?
Ask Can you think of any examples of a company’s pricing strategy?
Ask If you were selling a product or service, do you know what you would charge for it?
Ask If you were selling a product or service, what different forms of payment would you accept?
What would you definitely not accept?
Say A company’s financial model, in relation to billing and pricing strategies as well as in other areas,
is one of the most important pieces of the company puzzle. In this lesson we are going to
research at least one company to see if we can find out specific examples of their billing and
pricing strategies, delve into learning a little about pricing strategies, and then finish up with
having each of you decide your own pricing and billing strategies for a given virtual business.
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Outline
.During the 1st week of school
students will have created personal,
possibly electronic, Word Walls. The
method and location will be
established by you, the teacher.
I. Vocabulary/Personal Word Walls
II. Introduction (Ask and Say)
Specifics are listed in both this
document and the presentation slide
notes.
III. Discovery Activity Wal-Mart, 5 Questions
IV. Pricing Strategies Information, Practice,
and Assignment
Go over the information provided in
the presentation. You can go through
the practice with the students, and
then they can do the assignment.
The first item is the exact item listed
in the practice, but the item name has
been changed. You can provide your
own numbers and items, if it is better
for you/your students.
V. Billing Practices Information and
Assignment
VI. Review and Evaluation
Multiple
VII. Extensions
Specifics are listed in the presentation
slide notes. You can use any
business you think would be
appropriate. You can have students
do this individually, in partners, or in
groups. Assign each individual
student, partner group, or team a
question to do online research, locate
any information related to the
company’s pricing strategy and/or its
billing practice, and then report the
findings to the class.
Intelligences
Go over the information provided in
presentation. There isn’t a
Guidethe
practice with this assignment.
Go over the specific objectives of the
lesson and check for understanding.
There are two extension activities
listed in the presentation
Kinesthetic/
Bodily
Existentialist
Interpersonal
Intrapersonal
Logical/
Mathematical
Musical/Rhythmic
Naturalist
Verbal/Linguistic
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Visual/Spatial
Application
Discovery Activity
Have students review a company’s website (the example provided is for Wal-Mart, but you can use any virtual business
website, or you can use a variety of businesses) and research answers to the five questions. A document has been
provided that gives an example of how to answer.
Information - Pricing Strategies
Share these two slides of information with your students in preparation for the assignment.
Assignment - Pricing Strategies
Use the provided document to determine total sales revenue amount and a price per unit amount on given items.
Information-Billing Practices
Share this information with your students in preparation for the assignment.
Assignment-Billing Practices
Use the provided questions, slides 11 and 12 of the presentation. Have students answer and provide reasoning for their
answers.
Summary
Review and Lesson Evaluation
Review the lesson’s purpose and evaluate its effectiveness.
Evaluation
Informal Assessment
Any and all of the following can be used as informal assessments…
 Discovery Activity
 Pricing Strategies Assignment
 Notes taken from presentation
 Billing Practices Assignment
Enrichment
Extension
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Have students create a list of 10 items for their new business. Using the simple method we used in this
lesson, determine a price per unit for each item. All information needs to be included: Cost to Make,
Weekly Operating Expenses, Weekly Projected Sales, Weekly Target Profit, Total Sales Revenue, and
Price Per Unit.
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Have students type up a billing procedures information document for their customers.
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Lesson 3.03 Assessment Fees and Pricing (Researching and Setting) Virtual Business 1. Select 5 of the “need to know terms” we covered in this lesson and provide a definition, in your own words, and a graphical representation of the term. (sample provided) Term Definition Graphical Representation In‐House Billing Companies handle their own billing and receiving and do not hire a company to handle it for them. 2. From our discovery activity, we determined that some (maybe all) businesses have had to change their pricing and billing strategies due to certain factors. Which three factors we discussed do you think have had the most significance? Why? What future changes do you foresee? Factor 1 Why? Future Changes? 3. You have been given the task of determining the price per unit for two new items on your menu. You are hoping these items will become popular, but they are currently in the introductory phase of the product life cycle. Using the formula from this lesson and the given data, fill in the requested information. Chicken Sandwich $1.22 Weekly Operating Expenses $100.00 Hamburger $1.50 $100.00 Cost to Make Weekly Projected Sales Weekly Target Profit Total Sales Revenue Price Per Unit Copyright © Texas Education Agency, 2013. All rights reserved.
Lesson 3.03 Assessment Key Fees and Pricing (Researching and Setting) Virtual Business 1. Select 5 of the “need to know terms” we covered in this lesson and provide a definition, in your own words, and a graphical representation of the term. (sample provided) Answers will vary, and if students use graphics from the internet, you will want them to cite the source. Term Definition Graphical Representation n‐House Billing Companies handle their own billing and receiving and do not hire a company to handle it for them. 2. From our discovery activity, we determined that some (maybe all) businesses have had to change their pricing and billing strategies due to certain factors. Which three factors we discussed do you think have had the most significance? Why? What future changes do you foresee? Exact answers will vary, but could include: Inflation, Supply and Demand, Competition, The Internet, Online Purchasing, Smartphone Applications, Social Media, and Customer Reviews. Factor 1 Why? Future Changes? 3. You have been given the task of determining the price per unit for two new items on your menu. You are hoping these items will become popular, but they are currently in the introductory phase of the product life cycle. Using the formula from this lesson and the given data, fill in the requested information. Exact answers will vary based on student choices, but you can grade based on whether or not they used the correct calculation method. Cost to Make Chicken Sandwich $1.22 Weekly Operating Expenses $100.00 Weekly Projected Sales Weekly Target Profit Total Sales Revenue Copyright © Texas Education Agency,
2013. All rights reserved.
1
Price Per Unit Hamburger $1.50 $100.00 Copyright © Texas Education Agency,
2013. All rights reserved.
2
Pricing Strategies Assignment Lesson 3.03 ‐ Fees and Pricing (Researching and Setting) Virtual Business Fill in both the Total Sales Revenue and Price Per Unit columns with the correct answers. Use the formula (below) we covered in this lesson. Cost to
Make
Weekly
Operating
Expenses
Weekly
Projected
Sales
Weekly
Target
Profit
Skirt
$12.00
$50.00
8
$30.00
Coffee
Maker
$5.00
$50.00
4
$50.00
Shoes
$7.50
$50.00
20
$700.00
Watch
$13.80
$50.00
5
$500.00
E-Reader
$6.00
$50.00
15
$300.00
Total Sales
Revenue
Price Per
Unit
(Cost to Make x Weekly Projected Sales) + Weekly Operating Expenses + Weekly Target Profit = Total Sales Revenue
Total Sales Revenue / Cost to Make = Price Per Unit
Copyright © Texas Education Agency, 2013. All rights reserved.
Pricing Strategies Assignment Key Lesson 3.03 ‐ Fees and Pricing (Researching and Setting) Virtual Business Fill in both the Total Sales Revenue and Price Per Unit columns with the correct answers. Use the formula (below) we covered in this lesson. Cost to
Make
Weekly
Operating
Expenses
Weekly
Projected
Sales
Weekly
Target
Profit
Total Sales
Revenue
Price Per
Unit
Skirt
$12.00
$50.00
8
$30.00
$176.00
$14.67
Coffee
Maker
$5.00
$50.00
8
$50.00
$140.00
$28.00
Shoes
$7.50
$50.00
20
$700.00
$900.00
$120.00
Watch
$13.80
$50.00
5
$500.00
$619.00
$44.86
E-Reader
$6.00
$50.00
15
$300.00
$440.00
$73.33
(Cost to Make x Weekly Projected Sales) + Weekly Operating Expenses + Weekly Target Profit = Total Sales Revenue
Total Sales Revenue / Cost to Make = Price Per Unit
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