Advanced Pricing Strategy MCQs: 100+ Questions for MBA & Competitive Exams
1. Which element of the marketing mix directly generates revenue for a firm?
A. Promotion
B. Distribution
C. Pricing
D. Product design
✅ Answer: C. Pricing
2. Strategic pricing primarily focuses on balancing:
A. Advertising and branding
B. Cost, customer value, and competition
C. Distribution channels only
D. Packaging and logistics
✅ Answer: B. Cost, customer value, and competition
3. Which of the following is a key reason pricing is considered “crucial” in marketing?
A. It increases operational efficiency
B. It can protect margins even in mature markets
C. It improves employee satisfaction
D. It increases inventory levels
✅ Answer: B. It can protect margins even in mature markets
4. The economic lens of pricing focuses on:
A. Perceived quality and brand image
B. Supply, demand, incentives, cost structures
C. Digital media budgets
D. Retail environment conditions
✅ Answer: B. Supply, demand, incentives, cost structures
5. Which customer-related factor is MOST important in pricing decisions?
A. Cultural background
B. Willingness to pay
C. Brand logo
D. Salesperson incentives
✅ Answer: B. Willingness to pay
6. Competition-based pricing often results in:
A. Higher profit margins
B. Price wars and margin erosion
C. Minimal need for market analysis
D. Increased customer switching costs
✅ Answer: B. Price wars and margin erosion
7. Value-based pricing begins with understanding:
A. Historical price data
B. Cost of production
C. Customer perceived benefits
D. Competitor discounts
✅ Answer: C. Customer perceived benefits
8. The biggest limitation of cost-plus pricing is that:
A. It often ignores customer value
B. It is too difficult to calculate
C. It leads to premium pricing
D. It always results in losses
✅ Answer: A. It often ignores customer value
9. Dynamic pricing is most suitable for industries with:
A. Stable, long-term demand
B. Highly perishable inventory
C. Only B2B customers
D. No competitor pressure
✅ Answer: B. Highly perishable inventory
10. Price elasticity of demand measures:
A. The cost of acquiring customers
B. The sensitivity of demand to price changes
C. The difference between fixed and variable costs
D. Competitive intensity
✅ Answer: B. The sensitivity of demand to price changes
11. A product is price elastic when:
A. Demand changes very little with price
B. Customers prefer premium pricing
C. A small change in price leads to a large change in demand
D. It has high production cost
✅ Answer: C. A small change in price leads to a large change in demand
12. Inelastic demand is typically observed for:
A. Luxury watches
B. Restaurant meals
C. Essential medicines
D. Vacation packages
✅ Answer: C. Essential medicines
13. Which of the following reduces price elasticity?
A. Many substitutes
B. Low brand loyalty
C. Unique value proposition
D. Frequent price promotion
✅ Answer: C. Unique value proposition
14. Penetration pricing helps firms:
A. Maximize short-term profits
B. Build rapid market share
C. Increase production cost
D. Attract only premium customers
✅ Answer: B. Build rapid market share
15. Skimming pricing works best when:
A. Competitors are already low-priced
B. The product is easily copied
C. Early adopters value innovation
D. Customers are highly price-sensitive
✅ Answer: C. Early adopters value innovation
16. Psychological pricing includes:
A. Demand forecasting
B. Odd-even pricing
C. Cost accounting
D. Just-in-time production
✅ Answer: B. Odd-even pricing
17. ‘₹999 instead of ₹1000’ is an example of:
A. Value-based pricing
B. Odd pricing
C. Bundle pricing
D. Prestige pricing
✅ Answer: B. Odd pricing
18. When the price ending is kept high to indicate exclusivity, it is called:
A. Loss leader pricing
B. Freemium pricing
C. Prestige pricing
D. Tiered pricing
✅ Answer: C. Prestige pricing
19. Freemium pricing works best in:
A. Commoditized retail products
B. Software and digital services
C. Grocery retail
D. Heavy machinery
✅ Answer: B. Software and digital services
20. The main challenge with freemium pricing is:
A. High distribution costs
B. Free users rarely convert to paying users
C. Lack of scalability
D. Low initial adoption
✅ Answer: B. Free users rarely convert to paying users
21. Bundle pricing increases sales through:
A. Lowering product quality
B. Increasing perceived value
C. Decreasing awareness
D. Reducing distribution channels
✅ Answer: B. Increasing perceived value
22. Price discrimination involves charging:
A. One price for all customers
B. Different prices based on cost only
C. Different prices for different customer segments
D. Hidden fees and surcharges
✅ Answer: C. Different prices for different customer segments
23. Airline ticket pricing is a common example of:
A. Cost-plus pricing
B. Uniform pricing
C. Dynamic price discrimination
D. Fixed markup pricing
✅ Answer: C. Dynamic price discrimination
24. A high-low pricing strategy alternates between:
A. High quality and low quality
B. High margins and low margins
C. High list prices and heavy discounts
D. Seasonal and non-seasonal pricing
✅ Answer: C. High list prices and heavy discounts
25. Subscription pricing is most effective when:
A. Usage is unpredictable
B. The business wants stable recurring revenue
C. Product features rarely change
D. Customer retention is low
✅ Answer: B. The business wants stable recurring revenue
26. Which factor does NOT influence willingness to pay?
A. Brand reputation
B. Customer income
C. Cognitive bias
D. Production layout
✅ Answer: D. Production layout
27. Competitor-based pricing is dangerous because it:
A. Always results in higher price
B. Ignores internal cost structures
C. Does not consider demand
D. Both B and C
✅ Answer: D. Both B and C
28. When customers feel they are paying for more value than competitors offer, the pricing strategy is:
A. Cost-plus
B. Competition parity
C. Value-based
D. Break-even
✅ Answer: C. Value-based
29. A company charges more for faster delivery. This reflects:
A. Psychological pricing
B. Value-added pricing
C. Penetration pricing
D. Versioning
✅ Answer: B. Value-added pricing
30. Price floors are determined primarily by:
A. Competitor discounts
B. Cost structure
C. Cultural norms
D. Salesperson incentives
✅ Answer: B. Cost structure
31. Price ceilings are set by:
A. Distribution costs
B. Retail presence
C. Customer perception of value
D. Competitor promotions
✅ Answer: C. Customer perception of value
32. Which of the following helps firms avoid price wars?
A. Heavy discounting
B. Clear differentiation
C. Matching competitor pricing
D. Reducing value proposition
✅ Answer: B. Clear differentiation
33. A firm offering three versions of the same product (basic, pro, premium) is using:
A. Forced bundling
B. Tiered pricing
C. Loss leader
D. Target return pricing
✅ Answer: B. Tiered pricing
34. The “decoy effect” is used to:
A. Lower customer satisfaction
B. Make mid-tier options appear more attractive
C. Increase operational costs
D. Reduce conversions
✅ Answer: B. Make mid-tier options appear more attractive
35. Pricing that shifts due to time of day is known as:
A. Differential pricing
B. Dynamic pricing
C. Uniform pricing
D. Hybrid pricing
✅ Answer: B. Dynamic pricing
36. Cost-plus pricing assumes:
A. Customer value determines price
B. All competitors use the same strategy
C. Cost determines price
D. Price determines cost
✅ Answer: C. Cost determines price
37. Marginal cost is most relevant in:
A. Loss leader pricing
B. Digital product pricing
C. Bundling
D. Prestige pricing
✅ Answer: B. Digital product pricing
38. Which is a major advantage of value-based pricing?
A. It simplifies pricing decisions
B. It maximizes customer lifetime value
C. It reduces marketing spend
D. It eliminates elastic demand
✅ Answer: B. It maximizes customer lifetime value
39. Price anchoring works by:
A. Hiding the real price
B. Presenting a reference price
C. Reducing customer choices
D. Eliminating substitutes
✅ Answer: B. Presenting a reference price
40. Surge pricing by Uber is an example of:
A. Cost-plus pricing
B. Dynamic pricing
C. Odd-even pricing
D. Transfer pricing
✅ Answer: B. Dynamic pricing
41. A price set too low may signal:
A. Premium quality
B. Inferior value
C. Strong brand equity
D. Customer loyalty
✅ Answer: B. Inferior value
42. A "loss leader" strategy is used to:
A. Reduce brand recall
B. Attract customers into the store
C. Increase cost of goods
D. Limit distribution
✅ Answer: B. Attract customers into the store
43. Break-even pricing focuses on:
A. Profit maximization
B. Recovering total costs
C. Customer value creation
D. Predictive analytics
✅ Answer: B. Recovering total costs
44. When discounts are used too frequently, it may lead to:
A. Increased brand loyalty
B. Higher perceived quality
C. Customers delaying purchases
D. Higher margins
✅ Answer: C. Customers delaying purchases
45. Markup percentage is calculated on:
A. Profit only
B. Cost
C. Value
D. Competitor pricing
✅ Answer: B. Cost
46. The first step in value-based pricing is:
A. Setting price points
B. Identifying target customers
C. Benchmarking competitor pricing
D. Calculating cost
✅ Answer: B. Identifying target customers
47. Luxury brands use high pricing to:
A. Increase supply
B. Reduce demand
C. Signal exclusivity
D. Optimize logistics
✅ Answer: C. Signal exclusivity
48. In two-part tariffs, pricing structure includes:
A. One base price only
B. Fixed fee + usage fee
C. Bundle + discount
D. Psychological pricing
✅ Answer: B. Fixed fee + usage fee
49. Which pricing strategy encourages faster adoption of new technology?
A. Skimming
B. Penetration
C. Prestige pricing
D. Cost-plus
✅ Answer: B. Penetration
50. A price ceiling prevents prices from rising above a certain level because of:
A. Cost pressure
B. Regulations
C. Customer value perception
D. Competitor actions
✅ Answer: C. Customer value perception
51. A price floor prevents prices from dropping below:
A. Competitor average
B. Cost
C. Customer value
D. Market share
✅ Answer: B. Cost
52. Penetration pricing is risky because:
A. It builds too much loyalty
B. It may lead to unsustainable margins
C. Customers reject low prices
D. Competitors imitate premium features
✅ Answer: B. It may lead to unsustainable margins
53. Skimming pricing captures:
A. Low-income consumers
B. High-value early adopters
C. Bargain hunters
D. Price-sensitive customers
✅ Answer: B. High-value early adopters
54. Price fences in price discrimination help:
A. Maintain uniform pricing
B. Prevent arbitrage
C. Increase production cost
D. Reduce segmentation
✅ Answer: B. Prevent arbitrage
55. Geographic pricing is used when:
A. Demand is identical
B. Shipping costs differ
C. Products are virtual
D. Segmentation is impossible
✅ Answer: B. Shipping costs differ
56. A captive product pricing strategy requires:
A. High competition
B. A base product + essential accessory
C. No switching cost
D. Uniform pricing
✅ Answer: B. A base product + essential accessory
57. Transfer pricing is relevant in:
A. Retail sales
B. Multinational corporations
C. Local-only businesses
D. Direct-to-consumer models
✅ Answer: B. Multinational corporations
58. Odd-even pricing mainly influences:
A. Cost structure
B. Managerial incentives
C. Customer perception
D. Supplier discounts
✅ Answer: C. Customer perception
59. Competition-based pricing assumes:
A. Competitors price rationally
B. Demand is inelastic
C. Margins do not matter
D. Customers do not compare
✅ Answer: A. Competitors price rationally
60. In auctions, final price is determined by:
A. Seller’s cost
B. Buyer competition
C. Retailer strategy
D. Cost-plus
✅ Answer: B. Buyer competition
61. The most profitable pricing strategy long-term is typically:
A. Cost-plus
B. Value-based
C. Competition match
D. Loss leader
✅ Answer: B. Value-based
62. A demand curve with high slope indicates:
A. High elasticity
B. Low elasticity
C. High fixed cost
D. Low perceived value
✅ Answer: B. Low elasticity
63. Reference pricing refers to:
A. Internal psychological comparisons
B. Competitor analysis
C. Benchmarking cost structure
D. Loss leader strategy
✅ Answer: A. Internal psychological comparisons
64. Which pricing model aligns with SaaS products?
A. Two-part tariff
B. Subscription
C. Auction
D. Cost-plus
✅ Answer: B. Subscription
65. In versioning, firms offer:
A. Same product at same price
B. Different versions at different prices
C. Free product only
D. Only premium versions
✅ Answer: B. Different versions at different prices
66. Surge pricing uses:
A. Machine learning demand forecasts
B. Linear pricing
C. Cost-based pricing
D. Price ceilings
✅ Answer: A. Machine learning demand forecasts
67. A firm offering deep discounts to clear inventory is using:
A. Prestige pricing
B. Penetration
C. Markdown pricing
D. Two-part tariff
✅ Answer: C. Markdown pricing
68. Freemium pricing relies on:
A. High free user base
B. Zero variable cost per user
C. High conversion rate
D. Both A and B
✅ Answer: D. Both A and B
69. A product bundle priced lower than sum of individual items is intended to:
A. Increase customer confusion
B. Increase perceived value
C. Increase production cost
D. Reduce brand loyalty
✅ Answer: B. Increase perceived value
70. Effective pricing requires alignment with:
A. HR policies
B. Market positioning
C. Office design
D. Employee benefits
✅ Answer: B. Market positioning
71. Price sensitivity increases when:
A. More substitutes exist
B. Brand loyalty is high
C. Switching cost is high
D. Products are necessities
✅ Answer: A. More substitutes exist
72. Break-even quantity decreases when:
A. Fixed cost increases
B. Price increases
C. Variable cost increases
D. Margin decreases
✅ Answer: B. Price increases
73. A premium price is justified when:
A. Product has low value
B. Customers are price-sensitive
C. Differentiation is strong
D. Market is declining
✅ Answer: C. Differentiation is strong
74. A firm matching competitor discounts is using:
A. Differential pricing
B. Going-rate pricing
C. Variable pricing
D. Prestige pricing
✅ Answer: B. Going-rate pricing
75. A company offering mobile plans at ₹299, ₹499, ₹699 uses:
A. Skimming
B. Tiered pricing
C. Psychological pricing
D. Transfer pricing
✅ Answer: B. Tiered pricing
76. High-fixed-cost industries rely on:
A. Low margins
B. High volume
C. Ultra-premium pricing
D. Cost-plus
✅ Answer: B. High volume
77. Grey market issues arise due to:
A. Uniform global pricing
B. Price discrimination across countries
C. Production delays
D. Brand loyalty
✅ Answer: B. Price discrimination across countries
78. Personalization in pricing depends on:
A. Data analytics
B. Manufacturing strength
C. Distribution network
D. Internal HR policies
✅ Answer: A. Data analytics
79. A company increases price while adding new features. This is:
A. Cost-plus
B. Value-added pricing
C. Penetration
D. Skimming
✅ Answer: B. Value-added pricing
80. Surge pricing is controversial because:
A. Customers dislike paying less
B. It raises prices during emergencies
C. It decreases driver supply
D. It increases product quality
✅ Answer: B. It raises prices during emergencies
81. A company pricing lower than cost to eliminate competitors is using:
A. Predatory pricing
B. Freemium
C. Psychological pricing
D. Tiered pricing
✅ Answer: A. Predatory pricing
82. Which pricing strategy supports network effects?
A. Cost-plus
B. Freemium
C. Geographic pricing
D. Price ceiling
✅ Answer: B. Freemium
83. Farmers selling produce at different prices during the day use:
A. Tiered pricing
B. Time-based dynamic pricing
C. Freemium
D. Skimming
✅ Answer: B. Time-based dynamic pricing
84. Which pricing strategy reduces customer decision fatigue?
A. Excessive discounting
B. Limited price plans
C. Price skimming
D. Captive pricing
✅ Answer: B. Limited price plans
85. When price increases lead to increased revenue, demand is:
A. Elastic
B. Inelastic
C. Unstable
D. Negative
✅ Answer: B. Inelastic
86. A “pay-what-you-want” model works only when:
A. Marginal cost is high
B. Marginal cost is low
C. Competition is low
D. Value is unclear
✅ Answer: B. Marginal cost is low
87. A company offering warranty and after-sales service is engaging in:
A. Cost-plus
B. Value-based
C. Price discrimination
D. Captive pricing
✅ Answer: B. Value-based
88. Which pricing strategy aligns with the behavioral “compromise effect”?
A. Decoy pricing
B. Cost-plus
C. Prestige pricing
D. Predatory
✅ Answer: A. Decoy pricing
89. Higher switching cost results in:
A. Lower price sensitivity
B. Higher elasticity
C. Lower loyalty
D. Frequent discounting
✅ Answer: A. Lower price sensitivity
90. A restaurant offering “happy hour” discounts uses:
A. Versioning
B. Time-based pricing
C. Prestige pricing
D. Skimming
✅ Answer: B. Time-based pricing
91. In the economics lens of pricing, incentives influence:
A. Margin but not volume
B. Demand behavior
C. Fixed cost
D. Operations
✅ Answer: B. Demand behavior
92. Customer lens of pricing focuses on:
A. Supply chain efficiency
B. Perceived value and willingness to pay
C. Competitor strategy
D. Distribution channels
✅ Answer: B. Perceived value and willingness to pay
93. Competition lens emphasizes analyzing:
A. Internal operations
B. External pricing environment
C. Employee incentives
D. HR systems
✅ Answer: B. External pricing environment
94. In markets with high transparency, price wars are:
A. Unlikely
B. Very likely
C. Irrelevant
D. Illegal
✅ Answer: B. Very likely
95. Charging more to business users than students is:
A. Prestige pricing
B. Reverse bundling
C. Third-degree price discrimination
D. Peak pricing
✅ Answer: C. Third-degree price discrimination
96. A demand-based pricing strategy requires:
A. Competitor matching
B. Elasticity understanding
C. Low-margin pricing
D. Zero segmentation
✅ Answer: B. Elasticity understanding
97. Value communication is critical in:
A. Cost-plus pricing
B. Value-based pricing
C. Predatory pricing
D. Transfer pricing
✅ Answer: B. Value-based pricing
98. A retailer offering a free product with purchase uses:
A. Freemium
B. Bundle pricing
C. Psychological pricing
D. Cross-sell
✅ Answer: B. Bundle pricing
99. Charging different prices at different locations is:
A. Geographic pricing
B. Tiered pricing
C. Uniform pricing
D. Versioning
✅ Answer: A. Geographic pricing
100. A product with nearly zero marginal cost (e.g., app) should use:
A. Cost-plus
B. Penetration or freemium
C. Prestige
D. Geographic
✅ Answer: B. Penetration or freemium
101. Which pricing strategy helps remove dead stock?
A. Mark-up pricing
B. Clearance markdowns
C. Skimming
D. Prestige pricing
✅ Answer: B. Clearance markdowns
102. In bundling, customer perception is influenced by:
A. Marginal cost
B. Combined value proposition
C. Manufacturing cost
D. Supplier pricing
✅ Answer: B. Combined value proposition
103. A price that includes psychological cues (₹499) primarily affects:
A. Internal cost
B. Consumer decision heuristics
C. Employee bonuses
D. Supplier contracts
✅ Answer: B. Consumer decision heuristics
104. When a firm intentionally charges more than competitors, it engages in:
A. Premium positioning
B. Price skimming
C. Loss leader
D. Dynamic pricing
✅ Answer: A. Premium positioning
105. A company raising price because demand exceeds capacity reflects:
A. Skimming
B. Demand-based pricing
C. Psychological pricing
D. Prestige pricing
✅ Answer: B. Demand-based pricing
106. Price transparency increases when:
A. Data is limited
B. Customers compare online
C. Differentiation increases
D. Firms reduce communication
✅ Answer: B. Customers compare online
107. Which pricing strategy helps firms signal quality?
A. Low pricing
B. Prestige pricing
C. Geographic pricing
D. Loss leader
✅ Answer: B. Prestige pricing
108. A high switching cost industry (e.g., telecom) typically uses:
A. Freemium
B. Contract pricing
C. Skimming
D. Auction
✅ Answer: B. Contract pricing
109. A brand charging more for eco-friendly products reflects:
A. Cost-plus
B. Value-based
C. Predatory
D. Tiered
✅ Answer: B. Value-based
110. The most important foundation of strategic pricing is:
A. Cost sheets
B. Clear understanding of customer value
C. Competitor rumors
D. Sales targets
✅ Answer: B. Clear understanding of customer value
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