![]() ![]() Read more: Cost-Plus Pricing: Advantages, Disadvantages and Example Break-even pricingīreak-even cost-based pricing allows companies to find the base price of goods that covers the fixed costs of producing and distributing products. ![]() The selling price gives the company the revenue it needs to meet its return goal of 20%. P = (Cost per unit) + (Expected % of return)įor instance, a company that manufactures and sells mobile phones may have an expected return rate of 20% that it will then to its COGS in order to establish an appropriate selling price. This percentage combines with the total expenses associated with producing, storing and distributing or selling products and to give an appropriate selling price. Companies calculate and use a fixed percentage that represents the expected return on producing and then selling goods. There are two main types of cost-pricing that businesses use: Cost-plus pricingĬost-plus pricing is a common method of cost-based pricing and uses the total cost of goods sold (COGS) as the primary basis of pricing goods and services. ![]() Related: 14 Pros and Cons of Promotional Pricing To Consider Types of cost-based pricing Each method focuses on the costs of producing an offering as the basis for determining the best price that will result in 1) high customer satisfaction and 2) adds to a company's bottom line. This method allows companies to establish prices according to the cost of producing goods or providing services.Ĭost-based pricing consists of different methods of calculating appropriate selling prices. What is cost-based pricing strategy?Ĭost-based pricing is a pricing strategy companies use to set the selling prices of goods and services. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |