Question

A small gaming software company did not wish to run general business condition forecasting for the enhanced features added to its current mining game. When it came to pricing the enhanced game, the company decided it wanted to price the game to receive at least a certain level of gross margin. Which pricing strategy should the company choose to accomplish its pricing goal?

1. cost-plus
2. penetration pricing
3. skim pricing

Answer 1

1. Cost-plus

Step-by-step explanation:

Penetration pricing is when the pricing is set relative to the competition, often slightly lower than the competitors to gain marketing advantage. This does not necessarily ensure a certain gross margin.

Skim pricing is often higher than the market price, reminiscent of high quality or innovative nature of the product. This again may not be a good way to earn a determined margin.

Cost plus pricing is when a certain percentage is added to the costs to come up with the final price. This ensure that the company covers all the costs and then earns a certain percentage of gross margin.

Hope that helps.