Buyback contracts are most effective for a product with a low variable cost.

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Buyback contracts are arrangements in which a seller agrees to buy back products from a buyer at a predetermined price or percentage. This type of contract is most effective for products with lower variable costs, as it allows the seller to reduce the risk of holding excess inventory and the buyer to minimize the risk of inventory obsolescence. With a lower variable cost, the seller can offer a more attractive buyback price to the buyer, making the contract more appealing.

Buyback Contracts Are Most Effective for a Product with a Low