Which pricing strategy is based on the prices charged by rivals in the industry, rather than on the costs of production or the level of customer demand?

Which pricing strategy is based on the prices charged by rivals in the industry, rather than on the costs of production or the level of customer demand?

• A. Cost-Based Pricing
• B. Value-Based Pricing
• C. Competition-Based Pricing
• D. Cost-Plus Pricing

Answer: (C)

Pricing based on rivals' prices means you set your own price by looking at what other firms in the industry are charging and positioning your price around that level. This approach is common in markets where products are similar and customers mainly compare price, so matching or slightly undercutting competitors helps stay competitive. It ignores production costs and demand, which can be risky if costs rise or if customers are willing to pay more for different features or quality. It’s different from cost-based or cost-plus pricing, which start from production costs, and from value-based pricing, which bases price on the value perceived by customers.

Pricing based on rivals' prices means you set your own price by looking at what other firms in the industry are charging and positioning your price around that level. This approach is common in markets where products are similar and customers mainly compare price, so matching or slightly undercutting competitors helps stay competitive. It ignores production costs and demand, which can be risky if costs rise or if customers are willing to pay more for different features or quality. It’s different from cost-based or cost-plus pricing, which start from production costs, and from value-based pricing, which bases price on the value perceived by customers.