Some businesses in an attempt to make lots of money charge c

Some businesses, in an attempt to make lots of money, charge customers a very high price. Other businesses in an attempt to attract lots of customer, sell at lower prices. What are the dangers of each approach, Cost-based pricing, customer-based princing and competitor-based pricing? What approach do you think a business should use in pricing its products?

Solution

If one attempts to make lot of money by charging very high price, he will loose customer and market share. Therefore it is not sustainable.

Charging low prices can also result in loss which can be fulfilled. Therefore this is also not a very sustainable model.

Whereas competitor based pricing is the most sustainable type of pricing because you will get reasonable amount of profit as well as you will remain significant in the market.