Generally price will be set relatively high by the firm if manufacturing is expensive , distribution and promotion are exclusive . Explain the statement ?
Answers
Answer:
Cost based pricing is the easiest way to calculate what a product should be priced at. This appears in two forms: full cost pricing and direct-cost pricing. Full cost pricing takes into consideration both variable, fixed costs and a % markup. Direct-cost pricing is variable costs plus a % markup.
Cost-plus pricing is a pricing method used by companies to maximize their profits. The firms accomplish their objective of profit maximization by increasing their production until marginal revenue equals marginal cost, and then charging a price which is determined by the demand curve.
Cost-plus pricing is used primarily because it is easy to calculate and requires little information.
Key Terms
markups: Markup is the difference between the cost of a good or service and its selling price. A markup is added on to the total cost incurred by the producer of a good or service in order to create a profit.
variable cost: the amount of resources used that