What pricing arrangements or schedule would be used if the buyer is operating to an exact budget?
A.
Cost-plus pricing arrangement
B.
Fixed pricing arrangement
C.
Incentivised pricing arrangement
D.
Indexation pricing arrangement
The Answer Is:
B
This question includes an explanation.
Explanation:
A fixed pricing arrangement means the buyer and supplier agree on a set price that does not change regardless of market fluctuations or production costs. This gives the buyer full cost certainty, which is essential when operating to a strict or limited budget. It helps avoid financial risk over the contract duration.
[Reference:CIPS L4M3 Commercial Contracting Study Guide, Chapter 4, Section 4.2.2 – Fixed pricing mechanisms and their application., , ]
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