A flower delivery business wants to raise their overall sales volume to increase profit. After analyzing their costs, they choose their most popular line of flower arrangements and run a promotion on those arrangements. How would this promotion lead to higher profits?

  • By lowering the cost of the flower arrangements to increase margin.
  • By raising the revenue to increase demand.
  • By raising the margin on the arrangements to increase revenue.
  • By lowering the price of the flower arrangements to increase demand.

Correct Answer is:
By lowering the price of the flower arrangements to increase demand.

Companies who wish to increase volume will either decrease price to drive more sales or use various tactics to drive more demand. However, this might mean being less profitable in the short term.