Question

In the case files section, four people pay a different price for the same digital music player. Why do the prices they paid differ? Explain the factors that affected each person’s ultimate cost for the music player.

Answer 1

This difference in the various costs can be explained by a few factors. One of those is the location where the item was bought. For example, if the buyers leave in different countries, the costs involved will hardly be the same. It's usually cheaper where the product is made because there's no or little logistics costs involved. Still in relation to the location, the fiscal policy on foreign products can significantly affect the price of the item. Another consideration is the acquisition cost of and margin on the item by the retailer. These can significantly affect the ultimate costs for the user.