Question

In ________ pricing, the list price is determined by estimating what consumers are willing to pay for a product and then backing off a bit to provide a cushion.

a) strategic
b) value-based
c) cost-based
d) tactical
e) economic-based

Answer 1

In value-based pricing, prices are set based on perceived consumer value, slightly lower than what consumers are willing to pay, providing a competitive market cushion.

Step-by-step explanation:

In value-based pricing, the list price is determined by estimating what consumers are willing to pay for a product and then backing off a bit to provide a cushion. This approach centers on the perceived value of the product to the consumer, rather than basing the price solely on the cost of production or the current market prices. Value-based pricing aims to set a price that reflects the product's benefits and overall value to the consumer. By strategizing a bit below what consumers are willing to pay, the company ensures competitiveness and attractiveness in the market.