Question

Hector is opening an appliance store. He has estimated a monthly profit goal based on his anticipated expenses and earning goals and uses it to set product prices. Hector is implementing a ________ pricing strategy.A) penetration
B) price skimming
C) target return on investment (ROI)
D) competitor-based
E) value

Answer 1

Answer: C) target return on investment (ROI)

Explanation: target return on investment pricing model is one in which a business determines prices based on what the business owner would want to make from his capital invested in the business. It is the money invested, plus projected profits adjust for money's time value. Total expenses accrued is also factored in. As a pricing model, it tends to be used mostly by market leaders or monopolies.