Which of the following explains the cost-plus approach to pricing decisions?
A) arriving at a price for the product based on the competitive pricing prevalent in the market
B) arriving at a price based on the perceived value to a customer given the cost of design and added features
C) arriving at a price based on the demand and supply trends in the market
D) arriving at a price that earns a target return on investment

Question

Quizplus · Accepted Answer

The cost-plus approach involves calculating the total cost of producing a product and adding a markup to arrive at a price that will earn the desired level of return on investment. This approach is commonly used in industries where there is little price competition, and where the product is unique or highly customized.

Which of the Following Explains the Cost-Plus Approach to Pricing