What is a limitation of cost-based pricing?
Answer and explanation
Correct answer: It may ignore customer willingness to pay and market value
Cost-based pricing usually begins with the cost of producing or providing an offering and adds a desired margin. Its limitation is that it may not consider what customers are willing to pay, competitor prices, or the value customers perceive. It does consider cost, is not limited to donations, and does not automatically make profit zero. Hence A is correct.
Frequently asked questions
What is the correct answer to this question?
It may ignore customer willingness to pay and market value
Why is this the correct answer?
Cost-based pricing usually begins with the cost of producing or providing an offering and adds a desired margin. Its limitation is that it may not consider what customers are willing to pay, competitor prices, or the value customers perceive. It does consider cost, is not limited to donations, and does not automatically make profit zero. Hence A is correct.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: Business, Trade and Commerce.
