While working towards a target price of $45.00 per widget, Delta Inc., calculated their total input costs were $30.00 per widget. Adding $15.00 to the total input costs to arrive at $45.00 would be reflective of:
A)penetration pricing
B)experience curve pricing
C)cost-plus pricing
D)standard markup pricing

Question

Quizplus · Accepted Answer

The calculation of adding $15.00 to the total input costs to arrive at $45.00 is an example of cost-plus pricing, where the seller adds a markup to the cost of production to arrive at the selling price. Choice A, penetration pricing, involves setting a low price to penetrate the market and gain market share. Choice B, experience curve pricing, involves lowering the price with increased production experience. Choice D, standard markup pricing, involves setting a fixed percentage markup on top of the cost of production to arrive at the selling price.

While Working Towards a Target Price of $45