Which term best describes pricing that is based on the level of customer demand rather than production costs or competitor prices?

• A. Competitive pricing
• B. Market-led pricing strategies
• C. Cost-plus pricing
• D. Penetration pricing

Answer: (B)

Pricing driven by how much customers want or are willing to pay is market-led pricing strategies. This approach sets prices based on demand, perceived value, and market conditions rather than just production costs or what competitors charge, so prices can rise when demand is strong or fall when demand weakens. By contrast, cost-plus pricing starts from production costs, competitive pricing follows rivals’ prices, and penetration pricing is a tactic to enter a market with a low initial price rather than a description of demand-based pricing.