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Cost-plus pricing is a pricing strategy by which the selling price of a product is determined by adding a specific fixed percentage (a "markup") to the product's unit cost. Essentially, the markup percentage is a method of generating a particular desired rate of return.
Cost plus pricing is a cost-based method for setting the prices of goods and services. Under this approach, the direct material cost, direct labor cost, and overhead costs for a product are added up and added to a markup percentage (to create a profit margin) in order to derive the price of the product.
Traditional cost-plus pricing strategy has been impeding the productivity and profitability for a long time. As a new strategy, target costing is replacing traditional cost-plus pricing strategy by maximizing customer satisfaction by accepted level of quality and functionality while minimizing costs. Process of target costing
Value-based price (also value optimized pricing and charging what the market will bear) is a market-driven pricing strategy which sets the price of a good or service according to its perceived or estimated value.
Economic Value to the Customer (EVC) The method aims to guide businesses on how to best price a product or service. The EVC process enables businesses to capture more value than a traditional cost-plus pricing strategy.
Rate of return pricing or Target-return pricing is a method of which a firm will set the price of its product based on their desired returns on said product. The concept of rate return pricing is very similar to return on investment however, in this circumstance the company can manipulate its prices to achieve the desired goal.
The company is focused on the pharmacy distribution of drugs with a stated goal to lower the prices for generic drugs by removing middlemen and by moving to a cost-plus pricing strategy.
Cost based or cost-plus pricing is the approach of pricing service parts using cost as a base and then adding a standard markup on top to get the price for the service part. Cost based pricing is a popular technique and arguably still the most prevalent in the service parts pricing field.
Cost accounting provides the detailed cost information that management needs to control current operations and plan for the future. Cost accounting information is also commonly used in financial accounting, but its primary function is for use by managers to facilitate their decision-making.
Most systems allow use of transfer pricing multiple methods, where such methods are appropriate and are supported by reliable data, to test related party prices. Among the commonly used methods are comparable uncontrolled prices, cost-plus, resale price or markup, and profitability based methods.