Freight-Absorption pricing

Posted in Finance, Accounting and Economics Terms, Total Reads: 9657
Advertisements

Definition: Freight-Absorption pricing

This is a pricing method in which the manufacturer bears some or most of the of the freight or transportation costs involved in transporting the goods to the customer.

Here a manufacturer quotes a distant customer the factory price plus the freight cost. Since freight absorption helps cover fixed costs by generating additional customers, this is a good model for a firm with high fixed cost(s) and low variable costs.

It thus helps the firm to expand its market far beyond its normal reach and acquire more customers.

 

Search & Explore : Management Dictionary

Browse the definition and meaning of more terms similar to Freight-Absorption pricing. The Management Dictionary covers over 7000 business concepts from 6 categories.



Share this Page on:

Similar Definitions from same Category: