Problems in cost-based pricing services:
a) It is difficult to define the units in which a service is purchased. Thus the concept of price or unit is vague. Thus many services are sold in terms of input units rather than units of measured output. E.g. consultant, teacher etc.
b) Where a firm provides multiple services. The costs being a major component of employee time are difficult to allocate.
c) Service cost may not represent true value. For e.g. a darner charging same price for a expensive suit and an ordinary pant.
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