'A hair oil bottle of 100 ml of a company is priced at ₹ 50, while a 1000 ml/1 litre bottle is priced at ₹ 400.' (a) Identify and explain the method of pricing discussed above. (b) Also explain how the method of pricing identified in (a) above functions in the real-estate market.

Question

Accepted Answer

(a) The method of pricing discussed is the **Variable price method**. Variable pricing is a marketing approach that permits different rates to be extended to different customers for the same goods or services. In this case, the hair oil bottle of 100 ml is priced at Rs. 50, while a 1000 ml bottle is priced at Rs. 400. This demonstrates difference in order size by customers — the larger quantity is priced at a lower per-unit rate.

(b) In the real estate market, variable pricing functions as follows: Prospective homeowners often submit bids for properties that are less than the posted asking prices, in the hopes that the owners will accept a smaller amount. This often leads to a series of offers and counteroffers that sometimes results in a sale taking place. At other times, the two parties are unable to come to terms, and no sale takes place. This process of negotiation between buyer and seller to arrive at a mutually acceptable price is characteristic of variable pricing.