In the Appendix A of a long-term supply contract of Bulk Drug Substance, both parties agree that "The reference price for Bulk Product at the specification, per gram, shall be US$10. The unit price for Bulk Product for a specific Purchase Order shall be computed by multiplying the above- specified reference price by two corrective factors, namely inflation correction factor and exchange rate correction factor".
This pricing appendix is an example of…?
A . Discounted pricing
B . Fixed pricing
C . Volume-based pricing
D . Adjustable pricing
Answer: D
Explanation:
Price setting mechanisms fall into two main categories: fixed and variable. A fixed price mechanism is a straightforward concept which typically results in a relatively stable budget that can be forecast.
Variable mechanisms have an element of variable pricing per unit bought.
Setting a fixed price mechanism is in theory a relatively simple and straightforward concept, where the collector and the buyer agree on a fixed price for a specific material or mix of materials, for a certain length of time.
All other pricing mechanisms that are not fixed have an element of variable pricing per unit bought.
The most common variable pricing mechanisms can be divided into two groups:
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