(Drury) Pricing Decisions and Profitability Analysis - A price-setting firm facing long-run pricing decisions - Pricing customized products/services
3 important questions on (Drury) Pricing Decisions and Profitability Analysis - A price-setting firm facing long-run pricing decisions - Pricing customized products/services
What characterizes customized products or services?
Customized products or services relate to situations where products or services tend to be unique so that no comparable market prices exist for them.
How are mark-ups related to the demand for a product?
A firm is able to command a higher mark-up for a product that has a high demand.
Mark-ups are also likely to decrease when competition is intensive.
Mark-ups are also likely to decrease when competition is intensive.
Why should cost-based pricing formula be used when the final price is likely to be altered by management?
Because is provides an initial approximation of the selling price.
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