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A company has installed a new piece of capital equipment but needs to arrange a maintenance contract for three years. The company wants to know as accurately as possible what this price will be for the full contract. What would be an appropriate type of pricing mechanism to use when asking suppliers to quote prices?
Suggested Answer: A
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A fixed price with adjustment for inflation provides cost predictability while accounting for potential increases due to inflation. This strikes a balance between fixed costs and market realities. Reference: CIPS Level 4, Pricing Strategies.
2 comments · newest first
LO
Lourdes
2 days ago
I think a fixed price with adjustment for inflation makes sense here since costs can change over time, especially for a three-year contract.
QU
Quentin
7 days ago
I remember discussing fixed price contracts in class, but I'm not sure if inflation adjustments are really necessary for maintenance.