This Site Requires Javascript
Burger Menu

Variable Cost-Plus Pricing

Variable Cost-Plus Pricing

What is 'Variable Cost-Plus Pricing'

Variable cost-plus pricing is a pricing method in which the selling price is established by adding a markup to total variable costs. The expectation is that the markup will contribute to meeting all or a part of fixed costs, and generate some level of profit. Variable cost-plus pricing is especially useful in competitive scenarios such as contract bidding, but is not suitable in situations where fixed costs are a major component of total costs.

Explaining 'Variable Cost-Plus Pricing'

For example, assume total variable costs for manufacturing one unit of a product are $10 and a markup of 50% is added. The selling price as determined by this variable cost-plus pricing method would be $15. If contribution to fixed costs per unit is estimated at $4, then profit per unit would be $1.


Further Reading

An empirical investigation of the importance of cost-plus pricingAn empirical investigation of the importance of cost-plus pricing
www.ingentaconnect.com [PDF]
… The quadratic form of the average variable cost function of the oligopolistic firm is important ingredient of the presented chaotic cost-plus pricing model (14). REFERENCES 1. Benhabib, J., & Day, RH (1981) … Jablanović, V. (2011). The chaotic Monopoly Price Growth Model …

The dynamics of cost‐plus pricingThe dynamics of cost‐plus pricing
onlinelibrary.wiley.com [PDF]
… The quadratic form of the average variable cost function of the oligopolistic firm is important ingredient of the presented chaotic cost-plus pricing model (14). REFERENCES 1. Benhabib, J., & Day, RH (1981) … Jablanović, V. (2011). The chaotic Monopoly Price Growth Model …

Pricing behaviour and the cost-push channel of monetary policyPricing behaviour and the cost-push channel of monetary policy
www.tandfonline.com [PDF]
… The quadratic form of the average variable cost function of the oligopolistic firm is important ingredient of the presented chaotic cost-plus pricing model (14). REFERENCES 1. Benhabib, J., & Day, RH (1981) … Jablanović, V. (2011). The chaotic Monopoly Price Growth Model …

A theory of the determination of the mark-up under oligopolyA theory of the determination of the mark-up under oligopoly
www.jstor.org [PDF]
… The quadratic form of the average variable cost function of the oligopolistic firm is important ingredient of the presented chaotic cost-plus pricing model (14). REFERENCES 1. Benhabib, J., & Day, RH (1981) … Jablanović, V. (2011). The chaotic Monopoly Price Growth Model …

Pricing decisions and the neoclassical theory of the firmPricing decisions and the neoclassical theory of the firm
www.sciencedirect.com [PDF]
… The quadratic form of the average variable cost function of the oligopolistic firm is important ingredient of the presented chaotic cost-plus pricing model (14). REFERENCES 1. Benhabib, J., & Day, RH (1981) … Jablanović, V. (2011). The chaotic Monopoly Price Growth Model …

Cost accounting for war: Contracting procedures and cost-plus pricing in WWI industrial mobilization in ItalyCost accounting for war: Contracting procedures and cost-plus pricing in WWI industrial mobilization in Italy
www.tandfonline.com [PDF]
… The quadratic form of the average variable cost function of the oligopolistic firm is important ingredient of the presented chaotic cost-plus pricing model (14). REFERENCES 1. Benhabib, J., & Day, RH (1981) … Jablanović, V. (2011). The chaotic Monopoly Price Growth Model …


Tags

cost, pricing, variable, costs, price, product, fixed, economics, total, unit, full, marginal, profit, based, method, selling, economic, business, finance, definition, percentage, company, direct, production, markup, equal, adding, accounting, producing, part, prices, materials, firm, mark, financial, approach, average, ratio, capacity, determined, values, transfer, setting, policy, return, long, emerson
Section 508

WCAG 2.0

Section 508