Define and discuss the difference between value-based pricing and cost-based pricing. What are strengths and weaknesses of each method?

The following are the questions to prepare for your second exam.  On the two exam days we will randomly select among the four questions – the quantity of questions will be determined on exam day.   Please answer each question as thoroughly as possible, providing rich detail from our lectures, readings, and discussions.  The organization of your answers, the complexity of your analysis, and the clarity of your critical thinking are the key elements of your evaluation.  You will need a clean blue book for each day.
1. On Pricing  a. Define and discuss the difference between value-based pricing and cost-based pricing.  What are strengths and weaknesses of each method?  Explain in detail. b. Describe how your project company currently prices its main products or services.  Is this the best method?  Why or why not?  i. Comment on the traditional approaches of skimming and penetrating in your discussion as they would apply to your product/brand/company.    We recognize that you are marketing an existing product, but at one point the product was new and your current product will certainly experience a revival.

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