Question

Explain the difference between "mixed margin pricing" and "marketing margin". Be complete.

Answer 1

Mixed margin pricing is a pricing strategy in which a company selling different products determine the contribution of different products in the overall profit of the company. On the basis of this the company allocates the resources for the production in a way that maximizes its profit. In other words, the product that contributes highest to the profit is given more importance and allocated more resources. The margins are determined on the basis of the price of each product as well as the cost of producing them.

Marketing margin on the other hand is simply the difference between the price at which a retailer purchases the product from the wholesaler and the price at which the retailer sells the product to the final consumer.