Once you calculate the expenses, you can select from any of the three cost-based pricing approaches
Posted: Tue Feb 11, 2025 10:46 am
2. Mark-up pricing
This strategy is easy to implement and is used by businesses that offer multiple products. The profit level is expressed as a percentage to calculate the selling price and added to the production cost.
Let us understand this with an example. A cheese manufacturing company creates four types of cheeses. The production cost is $2 for 100gm of cheese. They wish to keep a 30% profit, which means the selling price will be $2.60 at the retail market.
3. Cost-plus pricing
It is quite the same as mark-up pricing. The profit is not calculated in croatia phone number list percentage; rather, it is a fixed number. Businesses whose manufacturing cost is uncertain or fluctuates frequently opt for cost-plus pricing. This means that your profit will not be hampered even when the production cost rises.
Here is an example to understand this pricing concept. If your total costs are $100 and you want a 20% profit margin, you would add $20 to arrive at a selling price of $120.
This strategy is easy to implement and is used by businesses that offer multiple products. The profit level is expressed as a percentage to calculate the selling price and added to the production cost.
Let us understand this with an example. A cheese manufacturing company creates four types of cheeses. The production cost is $2 for 100gm of cheese. They wish to keep a 30% profit, which means the selling price will be $2.60 at the retail market.
3. Cost-plus pricing
It is quite the same as mark-up pricing. The profit is not calculated in croatia phone number list percentage; rather, it is a fixed number. Businesses whose manufacturing cost is uncertain or fluctuates frequently opt for cost-plus pricing. This means that your profit will not be hampered even when the production cost rises.
Here is an example to understand this pricing concept. If your total costs are $100 and you want a 20% profit margin, you would add $20 to arrive at a selling price of $120.