Your Text Details Four Basic Approaches or Methods Used by Organisations

question 40

Essay

Your text details four basic approaches or methods used by organisations to pricing of products in the market. These are cost- based, competition- based, value- based and relationship- based pricing. Describe each of these approaches and outline the strengths and weaknesses of each with examples to demonstrate your understanding.

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Definitions:

Fixed Cost

Expenses that do not change with the volume of production or sales, such as rent, salaries, and insurance premiums.

Activity Level

The activity level is a measure of volume of work or operations, which could influence costs and operational efficiency within a business.

Activity Index

A measure used to estimate the amount of activity, effort, or work involved in a process or project.

Variable

An element or factor that can change or vary, often used in mathematical modeling or statistical analysis to represent changeable components.