Which of the following is a contract pricing strategy?

• A. Time and materials
• B. Open-end contract
• C. Forecasting
• D. Spot purchases

Answer: (A)

Time and materials is a contract pricing approach used when the scope of work may change or is not well defined. In this method, payment is based on actual hours of labor at agreed rates plus the cost of materials and any subcontracted services. This makes the price flexible and responsive to changes, which is why it’s considered a contract pricing strategy. The other options describe either contract formats or purchasing methods rather than how the price is determined: an open-end contract relates to indefinite quantities or terms, forecasting is a planning technique for predicting demand, and spot purchases are immediate, one-off buys driven by current market prices rather than a formal pricing arrangement in a contract.