Exam 10: Price

Marie is a software developer who works freelance. She wants her customers to really value her work and so she consistently sets her prices higher than the competition. Sometimes she loses work because of this, but often she wins the contract. What kind of pricing is she using?

Woods and Co is one of the largest office furniture suppliers in the UK. They outsource manufacturing overseas, sell direct and keep their prices low. New firms who don't have Woods' economies of scale find it impossible to compete. What kind of pricing are Woods and Co using?

What is the term for the volume of products sold that, at a given price, will cover the company's costs?

What type of cost is 'mark-up' pricing based on?

If a product is said to have a price inelastic demand curve, what does this mean?

Miranda owns a chain of handbag shops across England and Wales. She has spotted a good location to set up a shop in Edinburgh but her handbags aren't well known in Scotland and there is quite a lot of competition. She thinks it's worth a try anyway and decides to undercut the competition, at least until she gets known. What pricing strategy is Miranda following?

What is parallel importing?

Under which conditions would market skimming be likely to be a viable strategy?

Matt has some great Christmas gifts for sale but not enough people come into his shop and see them. They tend to shop at bigger retailers instead. He can't afford media advertising and so he decides to offer Christmas crackers for one penny each (well below what they cost him) to draw customers in. He puts a notice in the window advertising this bargain. What tactic is he using here?

Ivan runs a bakery. He has lots of bills to pay: electricity, rent for the shop, the staff's wages, flour for bread, cakes and pastries, spelt for his special spelt loaf etc. His accountant says it is important to classify these costs correctly so that he can set the right prices for his products. How would you classify the cost of the spelt?