Good Health Co. has set a suggested retail list price of $40 on its new vitamin tablets on the assumption that its target market will find the product attractive at this price. From this suggested retail list price, Good Health has subtracted its usual chain of markups for wholesalers and retailers to obtain its own selling price of $17. This is:
A) demand-backward pricing.
B) full-line pricing.
C) average-cost pricing.
D) odd-even pricing.
E) prestige pricing.

Question

Quizplus · Accepted Answer

Demand-backward pricing involves setting a final price that consumers are willing to pay and then subtracting desired margins to find the price at which a manufacturer can sell the product to wholesalers or retailers. Good Health Co. used this approach by starting with a suggested retail price and working backward to determine its own selling price.