AP Business with Personal Finance · Project 2: Marketing · Task 5: Price and Pricing Strategies

Sweet Pricing: The Business of Chocolate

A National Chocolate Day (October 28) lesson — interactive, self-paced capable, 45–50 minutes.

Duration: One 45–50 minute period + 25-minute AP practice (next class or homework)

Grade level: 10–12, AP Business with Personal Finance

Topic: 2.5 Price and Pricing Strategies

Learning objectives: LO 2.5.A, 2.5.B, 2.5.C

Course skills emphasized: 3.B, 3.C, 3.D, 2.B (per Task 5 alignment); 1.A–1.C and 3.A, 3.C, 3.D in AP practice

Task verbs practiced: Identify, Describe, Explain, Compare, Recommend (CED definitions)

Business Canvas Project element: Finance/Accounting — Price and pricing strategy (requires hypothesis testing)

Where This Fits in Project 2

This lesson is designed as Task 5, Day 1. It teaches the same content as the Pricing Mix Showdown — the four pricing strategies, market conditions that affect pricing power (inflation, recession, supply-chain issues, price elasticity of demand), and the legal constraints on pricing power (price fixing, predatory pricing, price gouging) — through a chocolate theme and interactive web activities. It can replace Day 1 on National Chocolate Day, or run after Day 1 as reinforcement before the Sega Business Case on Day 2. The closing station previews the Day 3 pricing strategy hypothesis work.

CED alignment notes: Topic 2.5.C in the CED lists price fixing (collusion), price gouging and price discrimination based on a protected status, so the Legal Line now includes a price discrimination case. Predatory pricing stays because the Project 2 guide includes it. Cost-based pricing follows CED 2.5.A.5: per-unit cost plus a desired per-unit profit. Price elasticity of demand is explained, not calculated, per the CED exclusion statement. Station 7, AP Exam Practice, uses the CED task verbs and follows the CED sample multiple-choice set and Free-Response Questions 3 and 4.

By the end of this lesson, you will learn:

how value-based, competitive, cost-based, and penetration pricing work, and when a business might choose each one;
how market conditions — such as supply-chain shortages, inflation, recession, competition, and price elasticity of demand — increase or limit a business's pricing power;
which legal constraints (laws against price fixing, price gouging, price discrimination and predatory pricing) limit how businesses set prices;
how to use AP task verbs to answer exam-style multiple-choice and free-response questions about pricing;
how to write a pricing strategy hypothesis for your Business Canvas Project.

Materials

Student interactive lesson: index.html (one device per student or pair; projector for whole-class mode)
Slide deck: slides.html (arrow keys to advance)
Five built-in explainer videos, 30–60 seconds each, inside the student lesson (see the Video Library below)
Printable AP practice (last pages of this plan) for students without devices
Optional: wrapped chocolate samples for the Warm Up (check allergy policies first)
Hypothesis Testing Template (from Project 1/Task 1) for the closing station or homework
Printable exit ticket (page 3 of this plan) for students without devices

Pacing Guide

Time	Station	What happens	Teacher moves
0–5	1 · Warm Up	Students pick one of three bars ($1.25 budget, $6.00 artisan, $3.00 protein) and name the customer characteristic behind the choice. Fact cards hook the cocoa story.	Show of hands by bar. Ask: "Which customer characteristic matters MOST when setting a price?" (mirrors Task 5, Day 1, Step 1).
5–12	2 · Strategy Sort	Review the four strategies, then match four chocolate products to them.	Have pairs commit before checking. Push for reasoning: "What clue told you it was cost-based?"
12–20	3 · Cocoa Crunch	Six headlines: does each increase or limit pricing power? Introduces price elasticity of demand and shrinkflation.	Pause on Headline 5 (cocoa shortage + price-sensitive teens) to connect to real 2024 cocoa prices. Quick debate: is shrinkflation smart or sneaky?
20–35	4 · Price Your Bar Lab	Students choose a segment and strategy, set a price, and see projected demand, break-even, and profit. Then a Cocoa Shock doubles cocoa costs.	Circulate: "Why did sales drop so fast for teens but not gift shoppers?" At ~minute 30, everyone triggers the shock. Students write a justification.
35–40	5 · Legal Line	Rule on four cases: price fixing, predatory pricing, price gouging, or legal.	Emphasize that a high price is not automatically illegal; gouging laws focus on essential goods during emergencies and vary by state.
40–45	6 · Exit Ticket	Five multiple-choice questions with instant feedback.	Individual work. Collect scores from the work summary or have students show their screen.
Next class or homework (25 min)	7 · AP Exam Practice	Four multiple-choice questions on a scenario and figure; a 3-point Business Concept Application FRQ; a 6-point practice Business Decision FRQ. Students self-score with scoring guidelines.	Use as the Day 2 Warm Up block or homework. Review FRQ 3(C) and FRQ 4(C) together: what makes an "explain" or "recommend" earn the point?
45–48	8 · Connect & Turn In	Draft a pricing strategy hypothesis for the Business Canvas Project; build and submit the work summary.	Cold-call two groups to read hypotheses aloud. Use "I like / I wish / What if" feedback.

Lesson Procedure

Warm Up (5 min)

Project the Warm Up slide. Students open index.html, enter their name, and choose a bar.
Students type which customer characteristic drove their choice (price sensitivity, status, convenience, values, health, brand loyalty).
Flip the three fact cards together. Ask: "If cocoa prices spiked, which of these three brands could raise its price most easily? Why?"

Pricing Strategy Sort (7 min)

Use the strategies slide to define value-based, competitive, cost-based, and penetration pricing.
Pairs match the four products, then check. Discuss any misses.

The Cocoa Crunch (8 min)

Define pricing power and price elasticity of demand (elastic = buyers react strongly to price; inelastic = they keep buying).
Students work through six headlines. In whole-class mode, use a quick thumbs up (increases) / thumbs down (limits) before clicking.
Students answer the shrinkflation prompt in writing.

Price Your Bar Lab (15 min)

Explain the setup: the competitor charges $3.00; projected sales depend on price compared with $3.00 and on the segment's price sensitivity.
Students test at least three prices and two segments, then settle on a strategy and price. The strategy check gives feedback on whether the price matches the strategy.
Trigger the Cocoa Shock. Students choose a response (raise price, shrink the bar, cut costs, or accept a smaller margin) and write a justification.

Discussion question: "Cost-based pricing gave you a 'correct' price — but did customers buy it? What does that tell you about using cost alone?"

The Legal Line (5 min)

Students rule on four cases and check their answers. Briefly discuss why the Valentine's price increase is legal.

Exit Ticket (5 min) and Connect (3 min)

Students complete the exit ticket individually.
Students draft a pricing strategy hypothesis for their Business Canvas Project using the sentence stem, then click Build my work summary and copy it into the LMS assignment or print it.

AP Exam Practice (25 min, next class or homework)

Students review the six CED task verbs. Point out that Identify needs no explanation, while Explain needs a "because" or "which leads to" link to evidence.
Students answer multiple-choice questions 1–4 (a stimulus set like the CED sample questions), then check them.
Students write each free-response part before opening its scoring guidelines, then self-score. Self-scores and responses appear in the work summary.
Debrief: share one response that earned FRQ 4(C) and one that didn't. Why did it miss? The usual causes are no evidence for one option or "it depends."

Answer Key

Activity	Answers
Strategy Sort	Truffle box — Value-based · Store-brand bar — Competitive · Custom logo chocolates — Cost-based ($1.60 per-unit cost + $0.80 desired per-unit profit = $2.40) · Bean Rocket — Penetration
Cocoa Crunch	1 Limits (many substitutes) · 2 Increases (loyalty) · 3 Limits (recession) · 4 Increases (seasonal demand) · 5 Limits (rising costs + elastic demand) · 6 Increases (no substitutes)
Legal Line	1 Price fixing · 2 Predatory pricing · 3 Legal pricing decision · 4 Price gouging · 5 Price discrimination
Exit Ticket	1-C · 2-A · 3-D · 4-B · 5-B
AP Practice MCQ	1-B (2.5.A.6, Skill 1.B) · 2-D (2.5.A.2, Skill 1.B) · 3-A (2.5.B.2, Skill 1.C) · 4-C (2.5.C.3, Skill 1.A)
AP Practice FRQs	See the scoring guidelines in the AP Practice section (3 + 6 points).
Price Your Bar Lab	Open-ended. Strong justifications name the segment's price sensitivity, compare the price with the $3.00 competitor, reference break-even, and explain the Cocoa Shock response.

Differentiation & Accessibility

Support: Pair students. Assign the 🎬 explainer videos as just-in-time scaffolds, and provide the four strategy definitions and the formula card (cost-based price = per-unit cost + desired per-unit profit; break-even = fixed costs ÷ contribution margin).
Challenge: Find the price that maximizes profit for each segment. Why is it different?
Extension: Research a real chocolate brand that changed bar size or price after 2024 and evaluate the decision.
Accessibility: All activities work by keyboard (Tab, Enter/Space, arrow keys on sliders). Feedback is announced to screen readers, graphics have text descriptions, color is never the only signal, and animation respects reduced-motion settings. Students can zoom to 200% without losing content.

Video Library (Just-in-Time Scaffolds)

Each video is a short animated explainer built into the student lesson. It opens from a 🎬 button at the point of need, with play/pause, scene-by-scene controls and a full transcript. The videos have no audio, so no captions are needed. Every scene's text is on screen and in the transcript.

Video	Where	Key ideas
Four Pricing Strategies (6 scenes)	Station 2	Value-based, competitive, cost-based, penetration; price ≤ per-unit cost means no profit (2.5.A)
Pricing Power and Elasticity (6 scenes)	Station 3	Elastic vs. inelastic demand, competition, market conditions; explain, don't calculate (2.5.B)
Contribution Margin and Break-Even (5 scenes)	Station 4	Fixed vs. variable costs, contribution margin, break-even, effect of a cost shock
Legal Limits on Pricing (6 scenes)	Station 5	Price fixing, price gouging, price discrimination, predatory pricing (2.5.C)
Reading AP Task Verbs (7 scenes)	Station 7	Identify, describe, explain, compare, recommend, pitch (CED definitions); FRQ tips

AP Practice: Free-Response Scoring Guidelines

Modeled on the CED sample scoring guidelines. Accept other responses that meet the task verb with accurate evidence from the scenario.

Business Concept Application (A) Describe a market research method Peak Cocoa used to gather the information in the scenario.

1 point

Peak Cocoa conducted primary research by running an in-store price test, selling the bar at three different prices in three similar stores and recording weekly sales.
Peak Cocoa ran an experiment that tested how customers responded to different prices.
Peak Cocoa used secondary research when it reviewed an industry report on cocoa costs.

Does not earn credit: Naming a method with no detail from the scenario (for example, “they did research”), or naming a method that doesn't appear in the scenario, such as a focus group.

Business Concept Application (B) Describe a finding revealed by the research.

1 point

At $2.99, the bar generated the highest weekly revenue, $1,614.60.
When the price rose from $2.99 to $3.49, weekly sales fell from 540 to 300 bars, nearly cutting sales in half.
Raising the price from $2.49 to $2.99 reduced sales only slightly, from 600 to 540 bars, but increased revenue.
Cocoa costs rose sharply over the past year, according to the industry report.

Does not earn credit: A finding with no data or detail from the scenario (for example, “price matters to customers”).

Business Concept Application (C) Explain how Peak Cocoa could use a finding from the research to achieve a business goal.

1 point

Because $2.99 produced the most revenue and is still within rivals' $2.29–$2.99 range, Peak Cocoa could use competitive pricing at $2.99 to increase weekly revenue without losing customers to rivals.
Sales dropped sharply at $3.49, which shows customers are highly price sensitive above $2.99. Peak Cocoa should avoid that price, because it would push customers to rival bars and lower revenue and market share.
Because cocoa costs are rising but customers respond strongly to price, Peak Cocoa has limited pricing power. It could raise its price only to $2.99 and look for other ways to cut per-unit costs to protect profit.

Does not earn credit: Restating a finding without connecting it to a goal, or naming a goal without explaining how the finding helps reach it (no “because” or “which leads to” link).

Business Decision (practice) (A) Like all businesses, B&B is affected by market and external factors that have an impact on its ability to achieve its goals.
i. Describe a market or an external factor indicated in the scenario that affects B&B.
ii. Explain how the factor you selected in part A(i) creates an opportunity or a problem for B&B.

i. Describe a factor (1 point)

Poor cocoa harvests in West Africa (an external, supply-chain factor) raised B&B's per-unit cost from $2.10 to $2.80.
B&B's customers are attentive shoppers: 62% check package size.

ii. Explain how it creates an opportunity or a problem (1 point)

The cocoa shortage is a problem because it cuts B&B's per-unit profit from $1.40 to $0.70 at the current price. B&B has to raise its price, reduce its costs or accept much lower profit.
Because so many customers check package size, shrinking the bar is a problem. Customers are likely to notice, which could hurt the trust B&B's brand depends on.

Does not earn credit: Naming a factor without scenario evidence, or describing the factor again in part ii without explaining its effect on B&B.

Business Decision (practice) (B) There are financial and nonfinancial criteria that can be used to compare the two options.
i. Using projected weekly profit as a criterion, describe a difference or similarity between the two options. Include specific evidence related to each option.
ii. Using one nonfinancial criterion relevant to the decision, describe a difference or similarity between the two options. Include specific evidence related to each option.

i. Financial criterion (1 point)

Option 2 has a higher projected weekly profit ($997.50) than Option 1 ($952.00), a difference of $45.50 per week.
Both options are projected to stay profitable, earning $952.00 and $997.50 per week before fixed costs.

ii. Nonfinancial criterion (1 point)

Customer trust and brand reputation: Option 1 keeps B&B's honest-labeling promise by openly raising the price. Option 2 risks the 70% of customers who would feel misled by a smaller bar.
Customer loyalty: under Option 1, some price-sensitive customers may leave (sales are projected to drop to 800). Under Option 2, loyal customers who notice the smaller bar may stop recommending B&B online.

Does not earn credit: A comparison that uses evidence for only one option, or a nonfinancial criterion that isn't connected to the scenario.

Business Decision (practice) (C) Recommend a course of action for B&B. In your response, you should do the following:
• Recommend one of the two options in the scenario.
• Explain why you recommend that option.
• Support your recommendation using two specific criteria, which may include the criteria from part B. Include evidence from the scenario related to each criterion you use.

Recommend and explain (1 point)

I recommend Option 1. Raising the price openly protects the honest brand that B&B's loyal customers value, which matters more in the long run than a small short-term profit difference.
I recommend Option 2. It earns more profit each week while keeping the price customers are used to, which protects B&B's market share.

Support with two criteria and evidence (1 point)

Option 1: Although it earns $45.50 less per week ($952.00 vs. $997.50), it avoids misleading the 70% of customers who would feel misled by a smaller bar. That protects the trust and online recommendations B&B's brand depends on.
Option 2: It earns $997.50 per week instead of $952.00, and keeping the $3.50 price avoids losing about 200 price-sensitive customers each week. B&B could reduce trust risk by clearly labeling the new size.

Does not earn credit: Recommending both options or neither (“it depends”), or a recommendation without evidence from the scenario for each criterion.

Substitute & Self-Paced Plan

No business background needed. The lesson runs itself: every station includes blue "On your own" directions, instant feedback, and explanations.

Write the lesson link on the board (your GitHub Pages address for index.html).
Students open the link, type their name at the top, and work through Stations 1–6 and 8 in order (Station 7 is next class or homework unless your teacher says otherwise). Suggested times appear on each station; the timer in the bottom corner is optional.
Students may work with a partner for Stations 2–4 but must complete the Exit Ticket on their own.
At the end, students go to Station 7, click Build my work summary, then Copy and paste it into the class assignment (or Print / save as PDF).
If students get stuck, have them open the 🎬 explainer video in that station before asking for help.
Students who finish early can start Station 7, AP Exam Practice, or redo the Lab with a different customer segment.

Troubleshooting: Answers are saved in the student's browser as they work. If a student switches devices, answers will not follow them — have them finish on one device. If the copy button doesn't work, students can select the text in the summary box and copy it manually. Students without a device can use the printable exit ticket on the next page.

Note for the sub: Please record any students who were absent or did not submit a work summary.

Printable Exit Ticket

Name: ______________________________ Date: ____________

1. A new chocolate brand launches at $1.50 per bar, well below rivals' $2.50, to win customers quickly before raising its price later. Which pricing strategy is this?

Value-based pricing
Cost-based pricing
Penetration pricing
Competitive pricing

2. Cocoa costs triple after poor harvests. Surveys show most of a brand's customers would switch to other snacks if chocolate prices rose. Which statement best describes the brand's pricing power?

It is limited, because demand is elastic and customers have substitutes
It is strong, because rising costs always justify higher prices
It is unaffected, because cost changes do not influence pricing
It is strong, because supply shortages make customers more loyal

3. Which of the following is an example of illegal price fixing?

A store lowers chocolate prices for a holiday sale
A chocolatier raises prices after its cocoa costs increase
A new brand prices its bars slightly below a well-known competitor
Two rival chocolate makers secretly agree to raise prices by the same amount

4. A chocolatier's per-unit cost for a custom bar is $2.00. Using cost-based pricing, it wants to earn a per-unit profit of $1.00 on each bar. What price should it charge?

$2.50
$3.00
$4.00
$1.00

5. A luxury brand charges $40 for a box of 12 truffles because customers associate the brand with special occasions and status, even though ingredients cost far less. Which strategy is the brand using?

Competitive pricing
Value-based pricing
Penetration pricing
Cost-based pricing

Business Canvas Project: Draft your pricing strategy hypothesis. We believe that [target customer] will pay [price] for [product] using a [strategy] strategy, because [reason]. We will test this by [method].

Printable AP Practice

Name: ______________________________ Date: ____________

Task verbs (CED): Identify: indicate or provide information about a specified topic, without elaboration or explanation. Describe: provide the relevant characteristics of a specific topic or concept. Explain: provide information about how or why a relationship, process, pattern, position, situation, or outcome occurs, using evidence and/or reasoning to support or qualify a claim. Compare: provide a description of similarities and/or differences. Recommend: articulate a course of action and support it with evidence.

Questions 1 through 4 refer to the following.

Bean & Blossom Chocolate (B&B) is a startup that makes dark chocolate bars from ethically sourced cocoa. B&B plans to sell its bars at specialty grocers next to several established brands. To attract customers away from those brands quickly, B&B will launch its bar at $2.50. It plans to raise the price to $3.50 once it reaches its market share goal. A survey of shoppers in B&B’s target market found that 70% would switch to a different brand if the price of their usual chocolate bar rose by $0.50.

Figure 1. Chocolate Bar Prices and Per-Unit Costs
Brand	Price	Per-unit cost
B&B (launch price)	$2.50	$2.10
Choco Royale	$3.25	$1.85
SweetCo	$2.99	$1.60
Value Bar	$1.49	$0.95

1. Which of the following pricing strategies is B&B most likely to use when it enters the market, given its launch price and goal?

Cost-based pricing
Penetration pricing
Price discrimination
Value-based pricing

2. Which of the following conclusions is supported by the data in Figure 1?

Choco Royale's per-unit cost is higher than B&B's per-unit cost.
Value Bar earns a higher per-unit profit than SweetCo.
At its launch price, B&B will earn the highest per-unit profit of the four brands.
At its launch price, B&B will earn a per-unit profit of $0.40.

3. Based on the survey results, which of the following best explains B&B's pricing power?

B&B has limited pricing power because customers in its market are highly responsive to price changes.
B&B has strong pricing power because ethically sourced cocoa guarantees customers will pay more.
B&B has strong pricing power because rivals charge more than B&B's launch price.
B&B's pricing power is not affected by customer responsiveness because it is a startup.

4. Suppose a B&B store manager began charging some customers a higher price for the same bar based on their nationality. Which of the following would this practice violate?

Laws against price gouging
Laws against price fixing
Laws against price discrimination based on a protected status
Laws against penetration pricing

Free Response: Business Concept Application (3 points)

Peak Cocoa sells a milk chocolate bar in supermarkets. Rival bars in the candy aisle are very similar and are priced between $2.29 and $2.99. Peak Cocoa’s goal is to increase weekly revenue without losing customers to these rivals. The marketing team ran a three-week in-store price test. Three similar stores each sold the bar at a different price, and the team recorded weekly sales at each store. The team also reviewed an industry report showing that cocoa costs rose sharply over the past year.

Figure 2. Peak Cocoa Price Test Results (weekly averages)
Store	Test price	Bars sold per week	Weekly revenue
Store 1	$2.49	600	$1,494.00
Store 2	$2.99	540	$1,614.60
Store 3	$3.49	300	$1,047.00

(A) Describe a market research method Peak Cocoa used to gather the information in the scenario.

(B) Describe a finding revealed by the research.

(C) Explain how Peak Cocoa could use a finding from the research to achieve a business goal.

Free Response: Business Decision, Practice Version (6 points)

You have been hired as a consultant to help the business described in the scenario decide between two possible courses of action.

One year after launch, B&B reached its market share goal and now sells its 3.0-ounce bar for $3.50, about 1,000 bars per week. Its brand is built on ethically sourced cocoa and honest labeling, and loyal customers often recommend the brand online. After poor cocoa harvests, B&B’s per-unit cost rose from $2.10 to $2.80. A survey found that 62% of customers check package size, and 70% would feel “misled” if a brand made a product smaller without telling them.

Option 1: Raise the price to $3.99 and keep the 3.0-ounce bar. Option 2: Shrink the bar to 2.6 ounces and keep the $3.50 price. The per-unit cost falls to $2.45, and projected sales assume most customers will not notice.

Figure 3. Projected Results of B&B’s Two Options
Option	Price	Per-unit cost	Per-unit profit	Bars/week	Weekly profit (before fixed costs)
1: Raise the price	$3.99	$2.80	$1.19	800	$952.00
2: Shrink the bar	$3.50	$2.45	$1.05	950	$997.50

(A) Like all businesses, B&B is affected by market and external factors that have an impact on its ability to achieve its goals.
i. Describe a market or an external factor indicated in the scenario that affects B&B.
ii. Explain how the factor you selected in part A(i) creates an opportunity or a problem for B&B.

(B) There are financial and nonfinancial criteria that can be used to compare the two options.
i. Using projected weekly profit as a criterion, describe a difference or similarity between the two options. Include specific evidence related to each option.
ii. Using one nonfinancial criterion relevant to the decision, describe a difference or similarity between the two options. Include specific evidence related to each option.

(C) Recommend a course of action for B&B. In your response, you should do the following:
• Recommend one of the two options in the scenario.
• Explain why you recommend that option.
• Support your recommendation using two specific criteria, which may include the criteria from part B. Include evidence from the scenario related to each criterion you use.