Assignment task:
A new entrant into the luxury electric vehicle market was unsure how to price their cars. The finance team felt the simplest approach was to use cost-based pricing. In this strategy, they would take the variable cost per unit and add the targeted profit per unit to determine the final price they would charge customers. However, the sales team was unhappy with this approach and wanted to use pricing, because they wanted to set a price lower than their competitor to penetrate the market and gain market share. Eventually, management opted to use pricing because the competition was weak, customers were motivated by a strong desire to protect the environment, and there were no other electric vehicles on the market that were as high in quality. This meant that customers would be willing to pay a relatively price.