Question

Explain the reasons for the popularity of the going rate method of price setting. How is it different from differential pricing? 

06 Aug 2026
Answer :
Word Count : 529
The going rate method of price setting is a pricing approach in which a firm sets the price of its product largely according to the prevailing prices charged by competitors in the market. Instead of determining price solely on the basis of its own costs or demand estimates, the firm observes the market price and fixes its price at, above, or below the prevailing level. This method is particularly common in industries where products are similar and competition is strong. The going rate method is popular for several reasons. First, it is simple and easy to implement. A firm does not need to undertake complicated calculations
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