8 Cost-plus pricing strategy Cost-plus pricing strategies are widely used and simple to calculate if costs are known.
Illustration 10 – Full cost-plus pricing strategy
The business needs to:
§ Establish its full unit costs, e.g.:
- raw materials$40 per unit
- variable production costs$40 per unit
- fixed costs based on planned volumes$20 per unit
- total cost$100 per unit
§ Add a profit margin:中 华 考 试 网
- 20% mark-up= selling price of $120 per unit
- 20% sales margin= selling price of $125 per unit
Realisation of the target profit is dependent upon:
§ accurate knowledge of costs
§ the selling price arrived at being one which customers are prepared to pay
§ selling the planned volume of goods.
The business must:
§ establish its units costs – e.g. prime, marginal, full
§ add a mark-up or sales-margin.
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Advantages of cost-plus pricingDisadvantages of cost-plus pricing
§ Widely used and accepted.
§ Simple to calculate if costs are known.
§ Selling price decision may be delegated to junior management.
发表于 2012-2-23 17:09:42
