Cost-plus Pricing

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Description of Cost-plus Pricing. Explanation.

Definition Cost-plus Pricing. Description.

Cost-plus Pricing is an accountants approach to pricing that adds a standard mark-up to the total cost of the product. For this reason it is also called Mark-up Pricing. The mark-up could be a fixed monetary amount, but more frequently is a fixed percentage, a certain profit margin. This type of pricing can be frequently found in manufacturing and retailing environments and is sometimes also necessary to win government contracts. The method is internally orientated.

One benefit of this approach is its simplicity. Also it is fact-based, can be easily calculated and administered. A disadvantage is the risk of underestimating customer demand and the value as perceived by the customer as important mechanisms. This may result in overpricing and underpricing. Furthermore the role of competitors is ignored. Historical accounting costs are used rather than replacement value.

Cost-plus Pricing Forum   The Cost-plus Pricing Method Cost-plus pricing is an easy method for applying a unit margin on a product. This makes it easy to calculate profit based on sales. But it does not take into account volume. Full cost plus pricing leads to the view that prices change li...         Begin a new topic

Cost-plus Pricing Special Interest Group Special Interest Group

Best Practices - Cost-plus Pricing Premium

Expert Tips - Cost-plus Pricing Premium

Resources - Cost-plus Pricing Premium Understanding Costs In-depth This presentation provides a better understanding about cost, cost types, costs drivers and other cost dynamics, and includes the following sections:<... Usage (application): Cost Drivers, Cost Behavior, Direct Costs, Indirect Costs, Controllable Costs, Uncontrollable Costs   Overview of Pricing and Pricing Strategies This presentation contains an overview of various pricing strategies, including for example pricing based on competition; psychological pricing; cost-... Usage (application): Pricing     News Cost-plus Pricing         Videos Cost-plus Pricing         Presentations Cost-plus Pricing         More Cost-plus Pricing

Compare with: Standard Cost Pricing  |  Marginal Cost Pricing  |  Target Pricing  |  Penetration Pricing  |  Price Skimming  |  Perceived Value Pricing  |  Psychological Pricing  |  Promotional Pricing  |  Competitive Pricing  |  Discount Pricing

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This ends our Cost-plus Pricing summary and forum.