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Pricing Strategy: Cost, Competition, and Customer

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Please provide 3-4 paragraphs about how a pricing strategy may include the three C's. Please provide a reference so I can read more.

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Solution Summary

The solution discusses the cost based pricing strategy, competition based pricing strategy. and Customer based pricing strategy. It shows that the choice of the pricing strategy is dependent on the market structure, income, technology, behavior and change in the buying habits of the consumers.

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Pricing strategy can be based on cost, competition, and customer.

1. Cost based pricing strategy

This is arrived at by quantifying the cost of producing the product or services and a percentage is added to the selling price. Cost-Based Pricing is based on what it costs you to make the product (MIT, n.d.). Roberts (2011) identified two types of cost-based pricing, cost plus and mark-up. Cost plus is based on uncertain production costs. Mark-up is similar, however is based on a known production cost. This type of pricing strategy is effective when the product or service is differentiated. This is the strategy used by Apple Corporation to sell its products at a premium. Bui (2012) noted that Apple products look, feel and seem very different from competitors' products. Most people who buy an Apple product buy it not because it offers more features or it's cheaper but because the company has succeeded in creating a unique identity for its products.

2. Competition based pricing strategy

Competition-based pricing describes ...

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