Question

Great Skin Inc. is establishing a pricing strategy for a new moisturizer. The total cost to produce each unit is $3.50. The company has decided to add a $1.50 markup, so the unit price to distributors will be $5. What approach to pricing the new moisturizer is Great Skin, Inc. utilizing?

A. value-added
B. good-value
C. cost-plus
D. competitor-based
E. break-even

Answer 1

C. Cost-plus

Step-by-step explanation:

Cost-plus pricing approach is an approach in which the selling price is determined by adding a specific amount markup to the product cost of production or unit cost. It is also called MARKUP pricing. It involves adding a markup to the cost of goods and services to arrive at a selling price.

In this case, a markup of $1.50 was added to the cost of producing the product $3.50, to have a selling price of $5.