Semana 14: Business Negotiation,Prices & payments (to get a X% discount, to give a

discount, discount on ) Sales (wholesale, to raise, sales rep,).Delivery (distributor, order,

shippingMg. Magali G. Prado Coronado
 ORIENTATION
• Look and analyze carefully each picture.

• Contextualize all the pictures.

• Avoid using spanish.

 CONTENTS
• Business Negotiation,Prices & payments (to get a X% discount, to give a
discount, discount on ) Sales (wholesale, to raise, sales rep,).Delivery
(distributor, order, shipping
Business Models

What is a business
model?
 What is a business
model?

Stories that explain

how enterprises work
That answer fundamental questions:

Who is the customer?

What does the customer
value?
We must also not forget the issue of revenue

“A million people walk into a

Silicon Valley bar. No one buys
anything. The bar is declared a
massive success”
What is your business model?

What?

What do you offer to

your customer?

Value
Who is your Proposition
target
customer?
W
Whhoo??

How do you
How do you
create value?
make money? Revenue Value
model Chain
Value? How?
Business Models

•Who – every business model serves a certain customer group. Who, therefore, is in your target
customer segment?
•What – is being offered to the target customer. The important aspect here is not the actual
product or service but the elements which the customer value (CVP)
•How – To build and distribute the value proposition the business has to master several processes
and activities. This, in addition to, your resources and capabilities creates your value chain
•Value – How are you going to generate revenue? How are you going to make money?
Business Models

By understanding these 4
associated points we can create a
tangible business model
Business Models

What is your business model?

The business model canvas
 Value
Proposition
• How are we going to create value?
• Which one of our customer’s problems are we solving
• What’s different about our idea?

• A value proposition creates value for a customer through a distinct mix of elements specifically catering
for their needs:
− Newness
− Some value propositions satisfy an entirely new set of needs that customers previously didn’t perceive
− Performance
− Improving product performance is traditionally a common way to add value
− Customisation
− Tailoring products and services to specific needs of customers.
 Value
Proposition
− Design
− Design is an important but difficult element to measure – Apple
− Brand / status
− Customers may find a value in the simple act of using and displaying a specific brand – brand aspiration
− Price
− Offering similar value at a lower price is a common way of satisfying needs.
− Risk reduction
− Businesses add guarantees to generate value through risk reduction, e.g. car warranties
− Convenience / Usability
− Making things more convenient to buy or easier to use is a good value proposition. Apple again is a good
example
 Customer
segments
• Who are you creating value to?
• Who are your most important customers?

• Mass Market – for example Coke – no real differentiation

• Niche – a specific and defined target audience
• Segmented – a few different niches who have different needs
• Diversified – two very different and unrelated customer segments
Channe
ls
• How do your customers want to be reached?

• Channels are touch points that play an important role in the customer experience.
• Channels serve several functions:
− Raising awareness among customers about a company
− Helping customers evaluate a company’s value proposition
− Allow customers to purchase specific products and services
− Delivering a value proposition
− Providing post purchase support
 Customer
relationships
• What type of relationship does each of our customer segments expect us to establish?
• How costly are they to establish?

• Personal assistance – email, phone, non specific

• Dedicated personal assistance – specific one to one service with a named individual
• Self service – no direct relationship with individuals
• Automated services – more sophisticated version of self service – recognising individual preferences
• Communities – Many companies are utilising on line communities to allow users to exchange knowledge
and solve each others problems.
• Co-creation – Wikipedia, You Tube, Amazon (through reviews) – co create value
 Key
activities
• What key activities do we need to do?
• These are the most important things a company must do to make its business work
− Production
− These relate to designing, making and delivering a product
− Problem Solving
− Coming up with new solutions to individual customer problems
− E.g. consultancies, hospitals, physios etc
− Platform / Network
− Ebay, matchmaking websites for example
− Visa with its payment platform
− Key activities in this area are platform management, service positioning and platform production
 Key
resources
• What key resources do you require?

• These are the most important assets required to make the business work.
− Physical
− For example, manufacturing facilities, vehicles, buildings, specialist equipment
− Intellectual
− For example, brands, patents, copyright, trademark
− Human
− Crucial in knowledge led (consultancy) and creative industries
− Financial
− Start up costs
− Financial resources
 Key
Partners
• Who are our key partners?
• Who are our key suppliers
• What do we need from them?
• The key partners building block describes the network of suppliers and partners that will make the
business work:

Who will we need to make this idea work?

• Key suppliers?
• Joint ventures?
Revenue
Streams

• For what value are our customer really willing to pay?

• How are they currently paying?
• How would they prefer to pay?

• A business usually involves one of two different types of revenue streams:

− Transaction revenues resulting from a one off sale to a customer
− Recurring revenues resulting from on going payments to deliver services or to provide post
purchase support
 Revenue
streams
• Different ways to generate revenue:
− Asset sale – standard product purchase model.
− Usage fee – mobile phones – the more you use something the more it costs
− Subscription – gym membership for example
− Lending / Renting – Temporarily using an asset
− Licensing – Image rights – music / sport
− Brokerage fees – Go Compare etc
− Advertising – fee generated by allowing advertising
 Cost
structure
• What are the most important costs in our business?
• Which resources are most expensive?
• Are any prohibitive?

• This area describes all of the costs that the business is likely to be charged:
− Cost driven
− Lean delivery such as Easy Jet / Ryan Air
− Value driven
− Some companies look in the opposite way to cost driven businesses.
− Their focus is on value creation – for example luxury hotels There are 2
further characteristics
− Fixed Costs
− Variable costs
Adding to your canvas
External Forces
 Competition

• Who are our competitors?

• Who are the dominant players in our particular sector?
• What are their competitive advantages or disadvantages?
• Describe their main offers.
• Which Customer Segments are they focusing on?
Substitut
es
• Which products or services could replace ours?
• How much do they cost compared to yours?
• How easy it is for customers to switch to these substitutes?
Competition
CVP / USP

How are you different?

What are your unique
competences?
External Forces

Do the external
forces change
anything: Create
opportunities?
Create threats?
What comes in your
mind when you
hear the word
“DISCOUNTS”?
TRADE DISCOUNT CASH DISCOUNT
 “CASH AND TRADE EMOTION”

CASH -

TRADE -
 -the amount of discount that
• the list price or the difference between the list price and the net price.
the wholesaler or
retailer receives off

ALWAYS!
 Yes sure! Since
Hello Pres. Obama! you will buy the
May I buy a box of whole box, I will
canned pineapple give you a
juice to you? discount of 30%
• Suggested Retail Price/Catalog Price/List
Price- three common terms for the price
which the manufacturer suggests an item be
sold to the consumer.
• Net price- the price the manufacturer or
retailer pays or the list price minus the trade
discount.

•Discount rate- a percent of the list price.

 TRADE DISCOUNT FORMULA

Trade Discount (TD) = List Price (LP) x Trade Discount Rate (R)
or
TD= LP x R

Net Price (NP) = List Price (LP) - Trade Discount (TD)

or
NP= LP - TD
 LET’S HAVE AN
EXAMPLE
Dominador will buy a box of canned tuna that lists for P680
and has a trade discount of 25%. How much is the Net
Price?
Thank Solution: TD = LP x R
you!
Trade Discount = P680 x .25%
= P170

NP = LP – TD

Net Price = P680 – P170

= P510
 TRY TO HELP THEM!
Ex. 2
Pablito will buy a set of Barbie Dolls
that lists for P950 and has a trade
discount of 30%. How much is the
Net Price?

Ex. 3
Clementina will buy a
coffee maker that lists for
P1,500 and has a trade
discount of 50%. How
much will Clementina pay?
 Ex.2
Solution:
Thank
you!
Trade Discount = P950 x .30%
= P285
Net Price = P950 – P285
= P665 A million
thanks!

Ex.3
Solution:
Trade Discount = P1500 x .50%
= P750
Net Price = P1500 – P750
= P750
-Additional discounts that
are deducted one after
another from the list price.
1. Step by Step Method

2. Complement Method
 1. Step by Step Method
Anne Curtis will buy a set of shoes that lists for P2, 000
and has a trade discount series of 30/20/15. Find the
net price.
TD= LP x R
NP = LP – TD
Gracias!
P 2, 000 P 2, 000 P 1, 400 P 1, 400 P 1,120 P 1,120
X - 600 X .20 - X - 168
.30 P P 1, 400 280 P 280 P .20 P P 952
600 1,120 168

Net Price= P952

- the difference between 100% and the
given percent.
Examples:

The complement of 30% is 70%.

The complement of 55% is 45%
The complement of 5% is 95%
 2. Complement Method
Anne Curtis will buy a set of shoes that lists for P2, 000
and has a trade discount series of 30/20/15. Find the
net price.
Step 1: Subtract each trade discount from
100% and convert to decimals.

100 100 100

- 30 - 20 - 15
70- .7% 80- .8% 85- .85%
Step 2: Multiply all the complements together to
get the net price factor.
Net Price Factor = .7 x .8 x .85
= 0.476
Anne Curtis will buy a set of shoes that lists for P2, 000
and has a trade discount series of 30/20/15. Find the
net price.
Step 1: Subtract each trade discount from
100% and convert to decimals.

100 100 100 That’s more

- 30 - 20 - 15 faster and
70- .7% 80- .8% 85- .85% easier way!
Thanks! 
Step 2: Multiply all the complements together to
get the net price factor.
Net Price Factor = .7 x .8 x .85
= 0.476
Step 3: Net Price = List Price x Net Price
Factor
Net Price = P2, 000 x 0.476

Net Price= P952

2. Complement Method
 SINGLE EQUIVALENT DISCOUNT
Formula:
Single Equivalent Discount = 1 – Net Price Factor
= 1 – 0.476
= 0.524% or 53%

Anne Curtis will buy a set of shoes that lists for P2, 000
and has a trade discount series of 30/20/15. Find the
net price.
 TRY TO HELP THEM!
Ex. 2
Aling Vilma will buy a set of
perfume that lists for P5, 000 and
has a trade discount series 20/15/5.
Find the net price.

Ex. 3
Antonino will buy a DSLR
Camera that lists for
P20, 000 and has a trade
discount series 30/20/10. Find
the net price and the Single
Equivalent Discount.
 Thank
Ex. 2 you! 

P 5, 000 P 5, 000 P 4, 000 P 4, 000 P 3, 400 P 3, 400

X - 1, 000 X .15 - 600 X .05 - 170
.20 P P 4, 000 P 600 P 3, 400 P 170 P 3, 230
1000
Net Price= P3, 230
Ex. 3
100 100 100 I’ll give
- 30 - 20 - 10 you my
70- .7% 80- .8% 90 .9% power for
helping
Net Price Factor = .7 x .8 x .9 me!
= 0.504
Net Price = P20, 000 x 0.504
SED= 1 – NPF
Net Price= P10, 080 = 1 – 0.504
=0.496% or 49.6%
 CASH DISCOUNT
- An incentive that a seller
offers to a buyer in return
for paying a bill owed
before the scheduled due
date.
-Credit terms 2/10, n/30. This
means you will get a 2% discount
if you pay within 10 days of
receiving the invoice. You must
pay the bill within 30 days or you
start to incur interest charges.
 LET’S HAVE AN EXAMPLE!
Vic Sotto received an invoice of P3, 000 dated
January 1, 2015, terms 2/10, n/30. He paid it in full
on January 9, 2015. How much did he pay?
Date of Invoice: January 1, 2015
Day 1 of the discount period:January 2, 2015
Last day of the discount period: January 10, 2015
Date of Payment: January 9, 2015 (Vic Sotto got a discount)

Cash Discount = Price x Discount Rate

= P3, 000 x .02%
= P60

Net Amount = Price – Cash Discount

= P3, 000 – P60
= P2, 940
Credit terms is 2/10, n/30 E.O.M.
This means you get a 2% discount if
you pay within the first 10 days of
the next month. You must pay the
bill within the first 30 days of the
next month or you start to incur
interest charges.
 LET’S HAVE AN EXAMPLE!
Bangga, Inc. received an invoice for P50, 000 dated
June 5, 2014, terms 2/10 E.O.M. The invoice is paid
on July 10, 2014. How much is the amount paid?
Date of Invoice: June 5, 2014
Day 1 of the discount period:July 1, 2014
Last day of the discount period: July 10,2014
Date of Payment: July 10, 2014 (Bangga, Inc. got a discount)

Cash Discount = Price x Discount Rate

= P3, 000 x .02%
= P60

Net Amount = Price – Cash Discount

= P3, 000 – P60
= P2, 940
Credit Terms is 2/10 R.O.G.
This means you get a
2%
discount if you pay within the
first 10 days after the goods
are received.
 LET’S HAVE AN EXAMPLE!
Nora Aunor received an invoice of P5, 550 dated January 10,
2015, terms 2/10, n/30 R.O.G., for a shipment that arrived on
February 5, 2015. Nora Aunor paid it in full on February 10, 2015.
How much did Nora Aunor pay?
Date of Invoice: January 1, 2015
Day 1 of the discount period:January 2, 2015
Last day of the discount period: January 10, 2015
Date of Payment: January 9, 2015 (Vic Sotto got a discount)

Cash Discount = Price x Discount Rate

= P3, 000 x .02%
= P60

Net Amount = Price – Cash Discount

= P3, 000 – P60
= P2, 940
Many of you will utilize this information at
some point in your life. You may be working in
purchasing, or accounting, or sales. You may
be negotiating for a car. You may own a small
business. These terms, and the math
underlying them, are important in
business. So, learn this material, utilize your
percentage multiplication skills, and your
percentage to decimal conversion skills, and
go do business! 
Reference: Santos, Francis. Principles of
Accounting. Malabon City: Mutya Publishing
House INC., 2007. 78-85.
 CONCLUSIONES Y/O ACTIVIDADES DE INVESTIGACIÓN SUGERIDAS
• Recuerde repasar todas las actividades que se realizan en clase. Cualquier
consulta, estamos siempre en contacto a través de la Sala de Conferencia
Thank you!