Answer to Question #218656 in Marketing for Omar

Question

Think of various pricing methods such as markup pricing, target-return pricing, perceived-value pricing, value pricing, going rate pricing and auction type pricing. As a marketing manager, which method do you personally prefer to deal with? Why? If the average price were to stay the same, which would you prefer (a) for firms to set one price and not deviate or (b) to employ slightly higher prices most of the year, but slightly lower discounted prices or specials for certain occasions?

Answer 1

Cost-plus pricing

Cost-plus pricing is a basic strategy that works by considering the total cost of making a product and adding a markup to that to determine the price of a product. This is a good strategy in the long term. A business owner needs to first understand the costs involved in production: material, labor, warehousing, machinery, utilities and such. The markup price that is added to the top of production cost is what the company makes in profit.