What is a characteristic of a cost-based price model?

A characteristic of a cost-based price model is that the supplier opens their books to reveal actual costs. This transparency allows both the supplier and buyer to understand the underlying costs associated with the goods or services being provided. By having access to the actual costs, the buyer can make more informed decisions regarding pricing and ensure that the price reflects the real expenses incurred by the supplier. This element of openness fosters trust in the buyer-supplier relationship and enables collaborative negotiation and fair pricing.

In contrast, other options do not align with the principles of a cost-based pricing model. While a fixed price set by the buyer regardless of costs is more indicative of a market-based pricing strategy, avoidance of sharing sensitive information undermines the transparency that is crucial in a cost-based model. Lastly, reducing transparency in pricing contradicts the fundamental idea of a cost-based approach, which emphasizes clarity and open communication about costs.