GradeGen

Setting a selling price by adding a mark-up to the cost of producing a product.

Setting a selling price by adding a mark-up to the cost of producing or supplying a product.

Cost-plus pricing means calculating the cost of producing or supplying a unit and adding a mark-up.

Setting a selling price by adding a mark-up to the cost per unit.

With cost-plus pricing, a business calculates the cost per unit and adds a mark-up. For example, a product costing £20 per unit with a £5 mark-up would sell for £25. This is a straightforward way to allow for costs and a desired return on each sale.

With cost-plus pricing, the business calculates the cost of producing a product and adds a mark-up to determine its selling price.

Cost-plus pricing adds a mark-up to cost; it does not guarantee overall profit if sales are too low or costs have been underestimated.

Cost-plus pricing does not guarantee overall profit: costs must be estimated accurately and enough products must be sold.

In cost-plus pricing, a percentage mark-up is calculated on cost, not on the selling price.