High School

The price of a t-shirt is established by adding a 30% markup to the cost to purchase it from the wholesaler. Which pricing strategy is being used?

A) Cost-plus pricing
B) Competitive pricing
C) Penetration pricing
D) Psychological pricing

Answer :

Final answer:

The pricing strategy used in the provided scenario, where a 30% markup is added to the cost of a product to establish its price, is called cost-plus pricing.

Explanation:

In this scenario, the pricing strategy being used is Cost-plus pricing.

This strategy is characterized by the addition of a markup to the cost of a product to determine its selling price. Essentially, the cost of production (the price to purchase it from the wholesaler) is calculated and then a desired profit margin (in this case 30%) is added to establish the price a firm will set for a product. In contrast, strategies like competitive pricing, penetration pricing, and psychological pricing rely on different factors such as market competition, customer behavior, and market penetration respectively.

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