When a major moving van company sells accessory products (boxes, bubble wrap, etc.) that must be used in moving a household's furniture, the company is practicing captive pricing.

Question

Quizplus · Accepted Answer

Captive pricing occurs when a company sells a main product along with a complementary product and sets the price of the complementary product higher than its actual value to make up for lower profits on the main product. In this scenario, the main product is the moving van service and the complementary products are the boxes and bubble wrap, which are necessary for the customer to use the service. Thus, the company is practicing captive pricing.

When a Major Moving Van Company Sells Accessory Products (Boxes