44 4 What is cost of service pricing What is the relationshi

4.4

4. What is cost of service pricing? What is the relationship between value of service pricing and cost of service pricing?

Solution

Cost of service pricing

Cost-of-service pricing is pricing the service based on how much it costs the company. Companies usually figure out the profits they want on a service and mark the service up so they receive the profits they want.

Relationship

The two different pricing strategies are completely unrelated because they are based on two different variables. Sometimes they can lead to similar prices but more often than not, they will be different. The cost-of-service pricing is a lot easier to figure out because all a company needs to know is the cost of the service and the markup they want on the service