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Rate of return pricing or target-return pricing is a method by which a company will set the price of its product based on their desired returns on said product.[1] The concept of rate return pricing is very similar to return on investment, but in this circumstance the company can manipulate its prices to achieve the desired goal. This method is used primarily by companies that either have a lot of capital or have a monopoly on the market and when an investor requests a specific return on their investment. In a competitive market rate of return pricing can be a poor market strategy as its focus at the final profit margins and does not account for supply and demand factors. If a competitor is able to set a lower price, it could decrease demand for the product resulting in a lower sales then forecasted and failing to reach the desired profit margin.
^"Target Return Pricing". Monash Business School. Retrieved 2022-04-28.
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