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Essay / Research Paper Abstract
This 11 page paper consider the idea that cost-based pricing procedures are only really applicable with commodities. The paper looks at this from a marketing perspective and after defining and demonstrating an example of cost pricing the paper considers the models that are then used to test for a potential market and measure the sales in that market, such as Fourt and Woolock, SPRINTER and regression analysis, before coming to a decision. The bibliography cites 6 sources.
Page Count:
11 pages (~225 words per page)
File: TS14_TEpricem.rtf
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Unformatted sample text from the term paper:
made after all costs have been accounted for. For this reason the price element of the 4 Ps marketing mix; product, price, placement and promotion is an extremely important element.
It has been argued that cost based pricing, which is a system allowing for the recouping of costs is applicable only to commodities. Whilst the paradigm of cost based
pricing may be seen as directly applicable to commodities it may be argued that there are many other elements that can impact on the pricing of commodities and also that
there are many costing elements on less tangible products, such as services and that the model is not limited to services. To begin with the definition and operation of
cost based pricing needs to be defined and examined in order to be applied to real world cases. In cost based pricing there must be a relationship between the cost
and the price. The need is for the price charged to be feasible, it is not the optimisation of the price. This means for many goods that the prices may
not be unique and also that prices will cover costs. IN many areas where there are high levels of competition it is possible to see cost based roping, as when
the cot of production decreases, either through technological developments or through economies of scale, it is not unusual for companies to reduce their selling price. However, in some cases it
will lead to increased profit if the result is a cost advantage and the company does not want to devalue their product in the face of the competition.
If this is to be applied to commodities these also need to be defined. A commodity in this meaning in a tangible physical product.
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