## 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 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 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 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 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 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 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 …