AMA AMA Pricing Strategy & Revenue Management 2 — Questions and Answers
Question 1: Dynamic pricing adjusts prices based on:
- Long-term contractual agreements with buyers
- Real-time market demand, competition, and other external factors (Correct answer)
- Fixed cost recovery schedules
- Annual inflation adjustments
Correct answer: Real-time market demand, competition, and other external factors
Dynamic pricing uses algorithms to adjust prices in real time based on demand fluctuations, competitor pricing, and market conditions.
Question 2: Which pricing strategy charges different prices to different customer segments for the same product or service?
- Captive pricing
- Price discrimination (Correct answer)
- Going-rate pricing
- Target return pricing
Correct answer: Price discrimination
Price discrimination involves charging different customer segments different prices for the same product based on their willingness or ability to pay.
Question 3: In a product line pricing strategy, a company sets prices across its product range to:
- Maximize the price of every individual item
- Create perceived value tiers and encourage upselling within the line (Correct answer)
- Match the lowest competitor price for all products
- Eliminate lower-margin products from the portfolio
Correct answer: Create perceived value tiers and encourage upselling within the line
Product line pricing structures prices across a range to signal quality tiers and guide consumers toward higher-margin products.
Question 4: Captive product pricing involves setting a low price for the core product and charging higher prices for:
- Complementary products required to use the core product (Correct answer)
- Delivery and installation services only
- Premium versions of the same product
- Products sold to corporate buyers versus individual consumers
Correct answer: Complementary products required to use the core product
Captive product pricing profits from accessories or consumables that customers must purchase to use the core product, such as razors and blades.
Question 5: A contribution margin is calculated as:
- Net profit divided by total revenue
- Selling price minus variable cost per unit (Correct answer)
- Gross revenue minus total fixed costs
- Operating income divided by units sold
Correct answer: Selling price minus variable cost per unit
Contribution margin represents the amount each unit sold contributes toward covering fixed costs and generating profit after variable costs are deducted.
Question 6: Which pricing tactic bundles multiple products together and offers them at a lower combined price than if purchased separately?
- Price anchoring
- Freemium pricing
- Bundle pricing (Correct answer)
- Loss leader pricing
Correct answer: Bundle pricing
Bundle pricing packages multiple products or services together at a discounted combined price to increase perceived value and encourage larger purchases.
AMA AMA Pricing Strategy & Revenue Management 2
Dynamic pricing adjusts prices based on: