Pricing is the key aspect that determines the competitive ability of a business given that clients compare the costs of products among providers before making a decision. As such, managers should develop proper pricing strategies that promote the profitability of an enterprise. It should be noted that a 1% change is price optimization has greater effects on the net profits that can be obtained by a firm. Therefore, various organizations use different pricing models that encompass value-based technique and cost-based approach to attain the intended objectives. This paper evaluates the differences between these two enterprise methods to determine the most appropriate plan. Differences Notably, cost-based pricing is determined by the amount of money spent by the manufacturer to produce and distribute a particular good in a market. In particular, the operator uses the cost of production as a concept to set the price of the commodity. As such, the producer…
