Question

Dell is trying to promote its range of laptops to Ahmad. The main objective of Dell is to produce low price and profitable PCs for the customers. Dell products are so customisable, the price is largely dependent on the options and services added to the product. That means, the more features Ahmad wants for his laptop, the more he will have to pay.

Based on the marketing situation above, answer the following questions:

Is this company using Value-Based Pricing or Cost-Based Pricing? Explain how you made the distinction.

(15 Markah / Marks)

Answer 1

Company is using Cost-based pricing

Cost-based pricing is a pricing method that is based on the cost of production, manufacturing, and distribution. Under this method, the price of a product is determined by adding a certain percentage (i.e. markup) in all the manufacturing costs to determine the final selling price of the product.

As mentioned in the question, In the present case also, the price is largely dependent on the options and services added to the laptop. which means, the more features one wants for his laptop, the more he will have to pay.

This clearly suggests that the price solely depends on the cost of the product rather than the other factors. This is the main point of distinction

Please provide rating if found correct :)

answered by: anonymous