Costing and Pricing

Cost Plus Pricing

Cost Price of the product + Profit (Decided by

the retailer) = Final price of the merchandise.

 According to cost plus pricing strategy the

retailer adds some extra amount to the actual
cost price of the product to earn his share of
profits. The final price of the merchandise
includes the profit as decided by the retailer.
Marginal cost pricing

 It bases a product’s selling price on the

variable costs of its production and includes a
margin and ignores any fixed cost.

 This variable price constitutes the direct

materials needed and not direct labour
 Marginal Pricing takes care of the manufacturing
costs but not the overhead costs.

 The low prices attract customers benefitting the

business. This high demand would bring profits
and higher revenues when compared
to products of high price range and
comparatively low demand. This brings the idea
of a short-term revenue boost’ to mind.
Backward Pricing

“How much do you think these types of

products should cost you?“
 In situations where a price range is ingrained
in the market, the marketer may need to use
this price as the starting point for many
decisions and work backwards to develop
product, promotion, and distribution plans.
Cost Sheet

 Cost Sheet is a statement which presents

detailed information relating to the various
stages of cost. It also shows the total cost of
the product manufactured during a particular
period of time.