Which of the following is true of target pricing?
A) It is used for short-term pricing decisions.
B) It is one form of cost-based pricing.
C) Its estimates are based on customers' perceived value of the product.
D) It is calculated by adding a markup component to the cost base.

Question

Quizplus · Accepted Answer

Target pricing is a pricing strategy that is based on the customer's perceived value of the product. It involves estimating the price that the customer is willing to pay for a particular product and then setting the price at that level. This approach is different from cost-based pricing, which involves adding a markup component to the cost base to arrive at a price. Target pricing is used for long-term strategic pricing decisions.

Which of the Following Is True of Target Pricing