The Brazilian government wants to build a global positioning satellite (GPS) system. The satellite manufacturer will receive a mutually agreed upon profit over and above all costs associated with the project. The pricing approach the satellite manufacturer uses is called
A)standard markup pricing.
B)experience curve pricing.
C)cost-plus-percentage-of-cost pricing.
D)cost-plus-fixed-fee pricing.
E)bundle pricing.

Question

Quizplus · Accepted Answer

The pricing approach described in the scenario is cost-plus-fixed-fee pricing. This is because the satellite manufacturer will receive a predetermined fixed fee on top of all costs associated with the project. This type of pricing is often used in government contracts as it ensures that the contractor is able to cover all costs and still make a profit.

The Brazilian Government Wants to Build a Global Positioning Satellite