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Cost-based pricing is a pricing method used to determine the selling price of products by a company. The price of a product is derived from adding profit to the cost of a product. In cost-based pricing either a percentage of the total product cost or a fixed amount is added to the product cost as profit. If you are looking for the best Cost Based Pricing assignment help then BookMyEssay is the right place. We are a leading academic writing solution provider and our assignments are written by experts who have in-depth subject knowledge.

What is Cost Based Pricing?

Cost-based pricing is an approach to pricing. This pricing method includes setting prices of products based on costs for distributing, producing, and selling the products. A company also adds a rate of return for its risks and efforts.

It is a pricing method where some percentage of profit margin is added to the product price to get the final price. Cost-based pricing, in other words, is a pricing method where a certain percentage of the cost of production is added to the product’s cost to find out its selling price. Cost-based pricing is of two kinds namely markup pricing and cost-plus pricing. Availing of online Cost plus pricing case study writing services can help you secure top academic grades.

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Types of Cost Based Pricing

The types of cost-based pricing are discussed in our Cost Based Pricing assignment help online as follows:

1. Cost Plus Pricing

Cost-plus pricing is a simple method to determine the price of products. In this method, a fixed percentage known as mark-up percentage as added as profit to the total cost to find out the price. For instance, if the total cost of a product is Rs 100 and then if Rs. 50 is added as profit to the product’s price as profit then the final price will be Rs. 150.

Cost-plus pricing is called as average cost pricing. This method is used commonly in manufacturing organizations. In economics, the formula is


AVC= Average Variable Cost

AVC(M)=Gross profit margin

M=Mark-up percentage

In M or Mark-up percentage, net profit margin and AFC are covered.

The benefits of the cost-plus pricing method are that it needs minimum information, it is simple to calculate, and it ensures seller against unexpected changes related to cost.

2. Markup Pricing

It is a pricing method where a fixed amount or a percentage of the product’s cost is added to the price of a product to derive the selling price of products. This pricing method is common in retailing where retailers sell products to earn a profit. For instance, when retailers take products from wholesalers for Rs. 100, they might add Rs. 20 to get profit.

Its formula is as follows:

Markup as a percentage of cost= Markup/cost *100

Markup as a percentage of the selling price= Markup/Selling Price * 100

For instance, a product whose cost is Rs. 400 is sold for Rs. 500 then the mark up as its cost percentage is 100/400*100=25.

The markup as the selling price’s percentage is 100/500*100=20.

The Advantages of Cost-based Pricing

The cost-based pricing method is a popular pricing method. You price the services based on materials and time. The benefits of cost-based pricing method are highlighted in our Cost Plus Pricing homework assignment help online as follows:

  • It does not need plenty of market research. Businesses are aware of the cost of production. Businesses take the total of all costs and then place a margin. It is simple and thus a popular method.
  • This pricing method is helpful when you do not possess information related to the willingness of customers to pay and there are not any direct competitors. The only data that you need is calculating the total costs.
  • It is logical and fair
  • It ensures that the costs that are incurred are covered.

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