Asked by Maddie Murch on Apr 25, 2024
Verified
Dremel Tools
Dremel sells a high speed rotary tool appropriate for many workshop projects.They have developed hundreds of accessories and bits for their tools for many different applications.Why is the markup on the accessories higher than the markup on the rotary tools?
Markup
The difference between the cost of a good or service and its selling price, expressed as a percentage over the cost.
Rotary Tools
High-speed, handheld power tools that rotate a bit or accessory for performing various tasks such as cutting, carving, sanding, and polishing.
- Comprehend the principle of price differentiation and its uses.
- Identify the distinctions between direct and indirect methods of price discrimination.
Verified Answer
KS
Kalei Simms7 days ago
Final Answer :
Dremel is engaging in a form of metering.Purchasers differ in their willingness to pay for the continued use of the system.Those who value it a lot will purchase many different accessories.Those who have lower willingness to pay are going only get the more basic bits.So,a higher margin for the accessories allows Dremel to extract more of the surplus from the high types without losing the low types.
Learning Objectives
- Comprehend the principle of price differentiation and its uses.
- Identify the distinctions between direct and indirect methods of price discrimination.