‘Aircon Ltd.’ manufactures and sells desert coolers with various unique features. There is no competitor of ‘Aircon Ltd.’ in the market. So they…

‘Aircon Ltd.’ manufactures and sells desert coolers with various unique features. There is no competitor of ‘Aircon Ltd.’ in the market. So they decided to sell these at a high price. Inspite of having unique features its sale was not picking up. They tried to find out the reason for this. After market research they found that to raise their market-share, they have to revise their pricing method. The company decides to adopt a pricing method based on manufacturing estimates which should cover the cost of producing the coolers plus a reasonable profit.

Identify the pricing method ‘Aircon Ltd.’ decides to adopt.

State one advantage and one disadvantage of this pricing method.