How does Banana Republic make a profit when they have a line of products that are discounted?
If Banana Republic discounts their clothing 80% more people will come and buy their clothing so they will make a profit if they sell the maximum number of discounted items. If they do not make a profit, keystoning is an example of what can happen. Keystoning is the practice of marking up prices by 100% or doubling the cost. If people are dedicated customers they will buy their product even if the price went up. All companies want to accomplish in their business is to reach their breakeven point.
It also depends on the demand. The change in the price will have a big impact on sales.
Why did Banana Republic discount their products by a large amount?
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