A bakery sells a seasonal ginger and pear loaf only during the winter festival. Ingredients are more expensive than for its standard bread, and the product ...
Question 1 Report
A bakery sells a seasonal ginger and pear loaf only during the winter festival. Ingredients are more expensive than for its standard bread, and the product is made in small batches. The owner wants to set a price that covers costs without discouraging regular customers.
(a) Identify one cost that may be higher for this seasonal product. [1]
(b) Which pricing method begins by calculating costs and then adding a mark-up? [1]
(c) Explain why the bakery should also consider competitor prices. [1]
Answer Details
(a) Ingredients may cost more for the ginger and pear loaf than for standard bread. Packaging, labour, or small-batch manufacturing costs are also acceptable. [1]
(b) Cost-plus pricing begins by calculating costs and then adding a mark-up. [1]
(c) Customers can compare the loaf with competitors' alternatives. If the bakery's price is much higher, customers may choose another product, reducing sales. [1]
Download The App On Google Playstore
Everything you need to excel in your exams
