![]() |
Contribution PricingKnowledge Center |
7 items • 30.355 visits
What is Contribution Pricing? Meaning.Contribution Pricing is a form of cost-plus pricing which involves separating the different products that make up the product portfolio and allocating to them the direct costs associated with their production. The price is determined at a level which will generate revenues in excess of these costs, thereby contributing towards meeting business overheads. Individual products can be analyzed in terms of their ability to cover their direct costs and contribute to overheads. It is a methodology where the price charged is based on the variable costs of production. A price is set that is greater than the variable costs, so that a contribution is made towards recovering the fixed costs. "Contribution" here means the difference between the price charged and the variable costs involved in producing a good.
Compare also: Variable Costing |
|
Return to Management Hub: Finance & Investing | Marketing & Sales | Supply Chain & Quality More on Management | Return to Management Dictionary |
This ends our Contribution Pricing summary and forum. |
About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
© 2022 12manage - The Executive Fast Track. V15.8 - Last updated: 23-5-2022. All names ™ of their owners.