Experience curve pricing refers to
A) the method of pricing where the price of a product often rises following the expansion of costs associated with the firm's producing and selling an increased volume of the product.
B) the point at which profits double then double again as more consumers buy the product.
C) a predictive pricing plan based upon the knowledge that the prices will fluctuate in a predictable pattern within a given industry.
D) a method of pricing based on the learning effect, which holds that the unit cost of many products and services declines by 10 percent to 30 percent each time a firm's experience at producing and selling them doubles.
E) a pricing strategy that uses price estimates based upon the consensus of the salesforce and the firm's top management team.

Question

Quizplus · Accepted Answer

Experience curve pricing is a method of pricing based on the learning effect, which holds that the unit cost of many products and services declines by 10 percent to 30 percent each time a firm's experience at producing and selling them doubles. This results in lower prices for consumers and increased profits for the firm. Option A is incorrect as it describes cost-plus pricing. Option B is incorrect as it describes a hypothetical scenario without any basis. Option C is incorrect as it describes speculative pricing. Option E is incorrect as it describes consensus pricing.

Experience Curve Pricing Refers to