Sweet Pricing: The Business of Chocolate — Slides

AP Business with Personal Finance · Project 2 · Task 5

Sweet Pricing: The Business of Chocolate

Happy National Chocolate Day! Today: how businesses set prices — and what can stop them.

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Station 1

Warm Up: Which Bar Wins Your Dollar? 5 min

Mega Bar

$1.25

Big, sugary, sold everywhere

Artisan 72%

$6.00

Small batch, ethically sourced

Power Choc

$3.00

20 g protein, gym-bag friendly

Write: Which characteristic of you as a customer drove your choice — price sensitivity, status, convenience, values, health, or brand loyalty?

Topic 2.5 · Price and Pricing Strategies

By the end of this lesson, you will learn:

  • how value-based, competitive, cost-based, and penetration pricing work, and when to use each;
  • how market conditions increase or limit a business's pricing power;
  • which legal constraints limit how businesses set prices;
  • how to use AP task verbs on exam-style questions;
  • how to write a pricing strategy hypothesis for your Business Canvas Project.

Station 2 · Strategy Sort 7 min

Four Ways to Price a Chocolate Bar

Value-based

Price = what customers believe it's worth. Brand, quality, status, experience.

Competitive

Price at, a bit above, or a bit below what rivals charge for similar products.

Cost-based

Per-unit cost + desired per-unit profit = price.

Penetration

Launch low to pull customers from established rivals and grab market share.

Your turn: match four chocolate products to their strategies in the lesson.

Station 3 · Cocoa Crunch 8 min

Who Has Pricing Power?

Pricing power: the ability to raise prices without losing too many customers.

Elastic demand: buyers cut back a lot when price rises → low pricing power.

Inelastic demand: buyers keep buying → high pricing power.

Limited Strong

Station 3 · Market Conditions

What Shakes Pricing Power?

  • Supply-chain issues: 2024 cocoa shortages pushed prices to record highs.
  • Inflation: rising costs pressure businesses to raise prices.
  • Recession: customers cut back on treats and wants.
  • Competition & substitutes: more choices = more elastic demand.

Shrinkflation: same price, smaller bar. When costs rise but pricing power is weak, some companies shrink the product instead of raising the price.

Smart strategy or sneaky? What does it do to customer trust?

Station 4 15 min

Price Your Bar Lab

  • The competitor sells a similar bar for $3.00.
  • Choose a customer segment and a pricing strategy, then set your price.
  • Try at least three prices and two segments.
  • Trigger the Cocoa Shock — your cocoa cost doubles. Respond!
  • Write your justification.
Cost-based price = Per-unit cost + Desired profit
Contribution margin = Price − Variable cost
Break-even = Fixed costs ÷ Contribution margin

Station 5 · The Legal Line 5 min

Where the Law Draws the Line

Price fixing

Competitors may not collude to agree on a price.

Price gouging

No raising prices because demand jumped in a crisis (illegal in many states).

Price discrimination

No different prices based on race, nationality, sex or another protected status.

Predatory pricing

No pricing below cost to drive rivals out of business.

A high price is not automatically illegal. Raising Valentine's gift box prices because demand is high? Legal.

Station 6 5 min

Exit Ticket

Complete the five questions in the lesson on your own. Read every explanation after you check — even for the ones you got right.

Ready for the AP exam? Questions like these ask you to identify a strategy, calculate a price, and explain how market conditions affect pricing power.

Station 7 · AP Exam Practice 25 min

Read the Task Verb First

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

Show how or why something occurs, using evidence and/or reasoning.

Compare / Recommend

Describe similarities or differences. Articulate a course of action and support it with evidence.

Practice set: 4 multiple-choice questions on a scenario and figure · Business Concept Application FRQ (3 pts) · Business Decision FRQ, practice version (6 pts). Write first, then check the scoring guidelines.

Station 8 · Connect & Turn In 3 min

Your Business Canvas Project: Pricing Hypothesis

We believe that [target customer] will pay [price] for [product] using a [pricing strategy] strategy, because [reason]. We will test this by [research method].

Then click Build my work summary → Copy (paste into the assignment) or Print / save as PDF.

Wrap Up

Which strategy would you use for your own product — and what market condition worries you most?

Next up in Task 5: the Sega Business Case — selling more consoles at a lower price, or fewer at a higher one?