Answer :
Cost based pricing is a type of pricing strategy that tries to cover costs while still providing the business owner with a respectable profit margin. It is calculated by multiplying the average manufacturing cost by a predetermined markup.
What is Cost based pricing?
- A markup is applied to the cost of a good or service to account for overhead and profit.
- Several methods are: Full-cost pricing, Variable cost pricing, Break even pricing.
- In especially for goods or services with a steady cost structure, it might be a beneficial strategy for pricing.
- It does not take into account the value that the product or service provides to the customer or the prices of competing products or services.
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