Suppose a shop owner sets a target ROI of 10 percent,which is twice that achieved the previous year.She considers raising the average price of a framed picture to $54 or $58-up from last year's average of $50.In order to still achieve her target,she might:
A)add value to the framed picture that adds minimal fixed and variable costs, yet consumers are willing to accept
B)include bundle pricing to encourage consumers to purchase extra items
C)use noticeable cheaper quality materials to lower her costs
D)mislabel her price of goods in her income statement to reflect the targeted ROI

Question

Quizplus · Accepted Answer

Adding value to the framed picture without adding significant fixed and variable costs can help increase the perceived value and justify the higher price point. This can be achieved by offering additional services such as custom framing, free installation, or a guarantee of satisfaction. This approach can help maintain customer satisfaction and loyalty while still achieving the target ROI. The other options, such as using cheaper materials or mislabeling prices, can potentially damage the shop owner's reputation and negatively impact sales in the long term. Bundle pricing may not be effective if the target ROI requires a higher price point for each individual item.

Suppose a Shop Owner Sets a Target ROI of 10