1. Cost-plus pricing is adding a fixed mark-up for profit to the unit price of a product.

2. Volkswagen might be considering an increase in price due to the increasing costs of

production in the segments labour and raw materials.
3. Loss leadership is the reduction of the car price to increase the quality of cars being sold
and then making larger profit margins on accessories which are sold with the cars, for
example back view cameras or seat heaters.
4.
Advantages:
- More effective for companies with large market power
- Easy to calculate and apply
- The price of the car will cover all the production costs
- The profit margin can be achieved easily
Disadvantages:
- It might be more difficult to apply where the companies sell more than one car brand
- It lacks flexibility
- The unit fixed cost could increase due to falling sales