Question

Which type of pricing orientation guarantees revenue on every sale, but runs the risk of having a competitor with potentially lower costs who may then undercut the pricing to take more of the market share?

Answer 1

Answer:

The correct answer is: profit-oriented pricing.

Explanation:

Profit-oriented pricing is set by companies after determining the production of total costs per unit of the goods offered. After that, the profit is established typically as a percentage of the costs incurred. The problem with this method of costing is that the sum of the costs and the profit margin can result in a price that is higher than the average for the product.

Even worse, competitors may take advantage of that scenario to lower their prices to drag more consumers away from the profit-oriented pricing entity.