Question 6
(a) What is pricing?
(b) State four methods that can be used to determine price.
(c) It costs an automobile parts dealer ₦400,000 to procure 200 pistons and the overhead expenses incurred in selling them is ₦40,000.If the dealer’s profit based on total cost is 20%, at what price per unit of the piston will he sell to achieve the profit level?
Observation
Candidates who attempted the question performed satisfactorily well. However, some of the candidates could not satisfactorily answer the (b) part of the question. The solution to the poorly answered part of the question is given below
(b) Methods to determine price
- Perceived-value pricing Method: Perceived-value pricing is a market-oriented method for setting the price.
- Going-rate Pricing Method
- Sealed-bid Pricing Method
- Target Return Pricing
- Break-even Analysis Method
- Mark-up Pricing Method: This is the most commonly used method.