Pricing Considerations Quiz

What is the definition of price?

• The cost of production

• The markup added by the supplier

• The amount of money expected, required, or given in payment for something

• The value of a product in the market

Which of the following is a supplier consideration in pricing?

• Period to which the price will apply

• Availability of alternative products

• Purchaser’s position in the market

• Nature of demand (e.g., price elasticity)

Which of the following is a purchasing consideration in pricing?

• Stage of the product in its life cycle

• Prices charged by competitors

• Whether the learning curve is applicable

• Supplier’s need for business

Which factor can cause price variation?

• Supplier’s branding

• Buyer’s reputation

• Payment terms such as cash discounts

• Exchange rate stability

What does price breakdown analysis aim to determine?

• The supplier’s net profit

• The taxes added to the cost

• The reasonableness of the proposed charge

• The shipping method used

In a cost price agreement, who bears most of the risk?

• The supplier

• The bank

• The buyer

• The customer

In a firm price agreement, what applies?

• The buyer can audit the supplier’s cost

• Payments are flexible

• No price variation is allowed without negotiation

• The risk is shared equally

What does value analysis aim to achieve?

• Maximize supplier profit

• Fulfil the function at the highest quality

• Ensure fair market value

• Fulfil function at the lowest total cost

In a fixed price + incentive contract, what happens if the real cost is below the target cost?

• The supplier is penalized

• The buyer pays only the real cost

• The supplier shares the savings as per agreed ratio

• The contract is cancelled

Which of the following are involved in value analysis?

• Only suppliers and purchasers

• Executive management, product design, marketing, and others

• Only the finance department

• Legal and compliance teams