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Hospitality Industry Managerial Accounting 8th Edition

Hospitality Industry Managerial Accounting (8th Edition)

Book Edition8th Edition
Author(s)Schmidgall
ISBN9780866124973
PublisherEduc. Inst. Of The American Hotel & Motel Assoc.
SubjectAccounting

Chapter 8, End of Chapter, Review Questions, Exercise 1

Page 426

Here is a tip:

Pricing is the process by which the business decides the prices for its products or services.

Explanation

  • Pricing based on prices of competitors: Pricing is set on the basis of  competitors. It varies with the change in prices by competitors.
  • Pricing by intuition:  In this method, managers use their intuition to predict the willingness of customers to pay the price of the product and reaction of customers on price change.
  • Pricing based on psychology: In this method, pricing is based on the psychology of the customer towards the prices. They are ready to pay for the goods and service. 
  • Pricing by trial-and-error method: In this method, managers first set a certain price and then observe the reaction of the customer. Then, they adjust the price according to the reaction.

Verified Answer

  • Prices of competitors
  • Pricing by intuition
  • Pricing based on psychology 
  • Pricing based on trial-and-error method
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