Please identify what types of companies would use market-based pricing versus what type of companies would...

Please identify what types of companies would use market-based pricing versus what type of companies would use cost-based pricing and why.

Expert Solution

Market Based Pricing

It is also called Competition based Pricing . According to the Market based pricing, products are compared which are offered in the market and price is determined according to their Competitors product. Seller of the Products sets the Price according to their Competitors product depending on how well their own Product matches up. Therefore Companies that face high level of competition used market based Pricing. It is difficult for the customers to see much difference between your product and that of your's competitors.

Cost based pricing

Cost based pricing is the pricing method of determining the selling price of the product by the company. In this pricing method, firm calculates the cost of the product and then add the profit percentage to calculate the selling price .

It is not difficult for the customer to identify difference between your product and your's competitors product.

Therefore, companies that face high competition use market-based pricing and companies that do not face much competition uses cost-based pricing.

ekkarill92 answered 2 years ago

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