Architectural firms that specialize in designing and constructing one-of-a-kind custom buildings such as the Rock Hall of Fame often use which pricing strategy?
A)cost-plus pricing
B)experience curve pricing
C)standard markup pricing
D)yield management pricing
E)price lining

Question

Quizplus · Accepted Answer

Cost-plus pricing is a common pricing strategy used by firms that provide customized products or services. These firms determine the total cost of producing the product or service and then add a markup to determine the selling price. Given the unique nature of the buildings designed and constructed by architectural firms like the one that designed the Rock Hall of Fame, the cost of producing each project is likely to vary significantly. Therefore, cost-plus pricing would be an appropriate strategy to ensure that the firm is appropriately compensated for the customized work they produce.

Options B, C, D, and E are not appropriate pricing strategies for a firm that produces one-of-a-kind custom buildings. Experience curve pricing typically applies to standardized products where the firm can benefit from efficiencies and economies of scale that come with producing the product repeatedly. Standard markup pricing may also not be suitable if the cost of each project varies significantly. Yield management pricing and price lining are strategies that apply to products or services that can be segmented based on customer demand or requirements. As one-of-a-kind custom buildings do not have clear segments, these strategies would not be appropriate.

Architectural Firms That Specialize in Designing and Constructing One-Of-A-Kind Custom