Cost plus pricing


Cost plus pricing is a pricing method whereby a standard markup is added to the estimated cost of the product.
This type of pricing includes the variable costs associated with the goods, as well as a portion of the fixed costs of operating the business.

It is calculated as (average variable cost + % allocation of fixed costs) x (1+ markup %).
For example; a business sells a hair straightner that has a variable for £20, with a fixed cost allocation of £5, and a desired markup of 30%
(£15+£5) x (1+0.30)
= £20.3

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