Photo AI
Beautiful Skin Pty Ltd has decided to market a razor for women - HSC - SSCE Business Studies - Question 3 - 2002 - Paper 1
Question 3
Beautiful Skin Pty Ltd has decided to market a razor for women. It has calculated total production costs for each razor and added a 10% margin to set the final price... show full transcript
Worked Solution & Example Answer:Beautiful Skin Pty Ltd has decided to market a razor for women - HSC - SSCE Business Studies - Question 3 - 2002 - Paper 1
Step 1
Which type of pricing is this?
Answer
The pricing strategy described is known as Cost pricing. In this scenario, Beautiful Skin Pty Ltd calculates the total production costs for each razor and adds a specific percentage (10%) as a margin to determine the final selling price. This approach ensures that all production costs are covered while also achieving a profit margin. It's important to distinguish this from other pricing strategies:
- Break-even pricing focuses on setting the price to cover costs without profit, not adding a margin.
- Competition-based pricing derives prices based on competitor prices rather than internal cost analysis.
- Market pricing often considers broader market demand and supply factors.
Therefore, the correct answer is (C) Cost pricing.