Using customer value data to arrive at your initial price is referred to as
A) cost-plus pricing.
B) target costing.
C) price skimming.
D) value-based pricing.
E) price penetration.

Question

Quizplus · Accepted Answer

Value-based pricing involves setting the price based on the value the product or service provides to the customer. Customer value data is key to determining this value and arriving at an initial price that reflects the benefits the customer receives. Cost-plus pricing involves setting a price based on the cost of producing the product or service, while target costing involves working backward from a desired profit margin to determine what price the product or service should be sold at. Price skimming involves setting a high initial price for a new product or service, while price penetration involves setting a low initial price to attract customers to a new product or service.

Using Customer Value Data to Arrive at Your Initial Price