Although break-even analysis and cost-plus pricing are important tools in setting prices based on the firm's cost structure, they should never be the driving force behind pricing strategy. Why?
A) because firms want to make a profit, not just break even
B) because customer expectations are far more important in setting prices
C) because prices should be based on demand, not costs
D) because different firms have different cost structures
E) because competitor's prices are far more important in setting prices

Question

Quizplus · Accepted Answer

The Answer of Although break-even analysis and cost-plus pricing are important tools in setting prices based on the firm's cost structure, they should never be the driving force behind pricing strategy. Why?
A) because firms want to make a profit, not just break even
B) because customer expectations are far more important in setting prices
C) because prices should be based on demand, not costs
D) because different firms have different cost structures
E) because competitor's prices are far more important in setting prices

Although Break-Even Analysis and Cost-Plus Pricing Are Important Tools in Setting