[Verse 1]
A customer calls with a special request
One-time order, different from the rest
Below our normal price they want to pay
Should we accept or should we walk away?
First check capacity, do we have the space?
If we're at full power, what gets displaced?
[Chorus]
Special order pricing, think it through
Incremental costs are what we view
Variable expenses, add them up
Fixed costs stay the same, don't double up
Opportunity cost when capacity's tight
Minimum price to make the deal right
[Verse 2]
Direct materials, direct labor too
Variable overhead, include what's due
But fixed costs spread across our normal sales
Don't add them twice, that's where logic fails
Calculate the floor, the break-even line
Anything above it helps the bottom line
[Chorus]
Special order pricing, think it through
Incremental costs are what we view
Variable expenses, add them up
Fixed costs stay the same, don't double up
Opportunity cost when capacity's tight
Minimum price to make the deal right
[Bridge]
When machines are idle, take what you can get
Cover variable costs, you're ahead of the bet
But when production's maxed and customers wait
Regular margin lost becomes the rate
Qualitative factors matter too
Brand reputation, what will customers do?
[Verse 3]
Minimum acceptable price formula's clear
Variable cost per unit, that's the floor here
Plus opportunity cost if capacity's strained
Regular contribution margin that's been drained
Strategic considerations weigh the choice
Let both numbers and wisdom guide your voice
[Chorus]
Special order pricing, think it through
Incremental costs are what we view
Variable expenses, add them up
Fixed costs stay the same, don't double up
Opportunity cost when capacity's tight
Minimum price to make the deal right
[Outro]
One-time deals need careful consideration
Incremental thinking drives the calculation
Price above the floor and you'll succeed
Special order pricing meets the need