The average price Xerox charged when it introduced the first stand-alone fax machine was $12,700.This premium price was a way for Xerox to recoup some of the research and development costs that went into producing this machine.Xerox used ________.
A)skimming pricing
B)penetration pricing
C)prestige pricing
D)price-quality inference pricing
E)trial pricing

Question

Quizplus · Accepted Answer

Skimming pricing involves setting a high price initially to recoup investment costs, which is exactly what Xerox did with their stand-alone fax machine. Penetration pricing involves setting a low price to enter a new market and gain market share, which is not applicable here. Prestige pricing is when a high price is charged to create an image of high quality or luxury, but this does not seem to be the primary motivation for Xerox's pricing strategy. Price-quality inference pricing is when customers assume that higher-priced products are of higher quality, but this does not seem to be the case with Xerox's pricing strategy. Trial pricing involves setting a low price initially to encourage customers to try a new product, which is not applicable here.

The Average Price Xerox Charged When It Introduced the First