Price strategies

Question 1

Cost plus pricing

Answer 1

Adding a percentage profit margin to the cost of supplying a good or service.

Advantage: You know you make a profit on each item sold.
Disadvantage: It might be too expensive for some customers.

Question 2

Competitor based

Answer 2

Setting a price similar to the business competitors

Question 3

Penetration and skimming

Answer 3

Penetration is starting the price low then raising it as popularity increases
Skimming is starting the price high because there is no competition. For example a new phone coming out.

Question 4

Discrimination and loss leader

Answer 4

Discrimination is charging different prices for the same product to different groups of customers,
Loss leader is a product that is sold at a loss so it attracts customers to buy other products.