Elmo Inc., a global conglomerate, designed the ElBrush, an electric toothbrush. Sensing market demand for the electric toothbrush, Elmo started with an ideal selling price of $3 based on customer value considerations and then targeted costs to ensure that the price was met. This exemplifies ________.
A) competition-based pricing
B) cost-plus pricing
C) target costing
D) everyday low pricing
E) high-low pricing

Question

Quizplus · Accepted Answer

The scenario exemplifies target costing, where the company starts by considering customer value and sets a target cost based on that, instead of simply adding a markup to the costs like in cost-plus pricing or setting the price based on competitors like in competition-based pricing. It is also not an example of everyday low pricing or high-low pricing.

Elmo Inc, a Global Conglomerate, Designed the ElBrush, an Electric Toothbrush