Cost-based pricing:
A) Considers price elasticity of demand
B) Is not commonly used
C) Uses a mark-up percentage
D) Is always based on variable cost

Question

Quizplus · Accepted Answer

Cost-based pricing involves determining the cost to produce a product and then adding a percentage mark-up to that cost to determine the selling price. This mark-up is typically a fixed percentage based on the company's target profit margin. Therefore, option C is the correct statement. Option A is incorrect because price elasticity of demand is not considered in cost-based pricing. Option B is incorrect because cost-based pricing is a common pricing strategy. Option D is incorrect because cost-based pricing can be based on both variable and fixed costs.

Cost-Based Pricing