average cost pricing rule


Limitation on prices businesses charge to customers imposed by regulators. The amount a business can charge for its product or service is equal to the cost required to create that product or service. Limitation is generally placed on monopolies, legal or natural industries.

Use this term in a sentence

You should try to use the average cost pricing rule so that you know you are setting a fair rate for your product.

​ Was this Helpful? YES  NO 6 people found this helpful.

Although John wanted to price his cars at double the cost, the average cost pricing rule did not allow him to price them at such a high mark up.

​ Was this Helpful? YES  NO 11 people found this helpful.

AVERAGE COST PRICING RULE A pricing strategy that regulators impose on certain BUSINESSES to limit the price they are able to charge consumers for its products/services equal to the costs necessary to create the product/service. This implies that businesses will set the unit price of a product relatively close to the average cost needed to produce it.

​ Was this Helpful? YES  NO 9 people found this helpful.

Show more usage examples...

Browse Definitions by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
average cost flow assumption average daily balance