In setting the price on a new product,an entrepreneur bases the price on the amount of money used to produce the product. This is known as

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Cost-based pricing is when the entrepreneur sets the price of a product based on the cost of producing it. This includes the variable costs such as materials and labor as well as the fixed costs such as rent and equipment. By using this approach, the entrepreneur can ensure that they are able to cover their costs and still make a profit. However, it is important to also consider market demand and competition when setting pricing strategy.

In Setting the Price on a New Product,an Entrepreneur Bases