Page 85 - EBOOK DPM 10013 POM-FINAL 25.10.2021
P. 85
ANSWER
1.Cost-based pricing
2. Value-based pricing
3. Competition-based pricing
2.( i ) Cost-based pricing
Advantages:
Calculations to determine price are simple
During price setting unknowns are taken into account.
Pricing ensures total profits for the business.
Disadvantages:
Ignores how customer demand affects price.
It doesn’t take into account actions by competition.
Price setting cannot be solely based on costs.
( ii ) Value-based pricing
Advantages
The price set supports product image.
The values added helps increase products sales.
Differentiation attracts new customers.
Disadvantages:
Calculations may ignore product costs.
It might forget about existing competitors.
It requires great selling techniques.
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