Practicing Success
Practicing Success
CUET Preparation Today
| Which of the following is NOT a disadvantage of cost plus pricing method? |
This method does not take into account the future demand for a product which should be the base before deciding on the price of a product and therefore a serious limitation of this method. It also does not take into account the competitors actions and their effect on pricing of the product, because in today's competitive world if one solely depends on cost plus pricing it can lead to failure of company’s product in the market. It can result in the company overestimating the price of a product because this method includes sunk cost and ignores opportunity cost also while calculating cost there is an element of personal bias while deciding the profit margin which is to be added to a product. The low profit margins may not be sustainable long enough for the strategy to be effective. |
| The low profit margins may not be sustainable long enough for the strategy to be effective. |
| Option 4: The low profit margins may not be sustainable long enough for the strategy to be effective- This is a disadvantage of penetrate pricing. |
