A producer of microwave ovens has adopted an experience curve pricing approach for its new model. The firm believes it can reduce the cost of producing the model by 20 percent each time volume doubles. The cost to produce the first unit was $1,000. What would be the approximate cost of the 4,096th unit?
Customary Pricing
There are various types of pricing strategies followed in the market. They are psychological pricing, odd pricing, free onboard pricing, customary pricing, prestige pricing, dual pricing, ruling pricing, negotiated pricing, mark up pricing, etc. each one can be explained as follows:
Multiple Unit Pricing
“Multiple-unit pricing is a practice where a company offers consumers a lower than unit price if a specified number of units are purchased.”
A producer of microwave ovens has adopted an
experience curve pricing approach for its new
model. The firm believes it can reduce the cost of
producing the model by 20 percent each time volume doubles. The cost to produce the first unit
was $1,000. What would be the approximate cost
of the 4,096th unit?
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