Cost-plus pricing 14 *.3, cost-Plus Pricing.20, to achieve the 30 profit margin goal, your company must bill clients.20 per hour. In our example of the printer, you first have to determine the break-even price, which is the sum of all of the expenses involved in creating a product, including expenses like supplies, production costs, and marketing costs. Profit margin goal: Your company wants to make a margin of 30 on the repair service. Profit margin goal: Your company wants to make money on the printers at a margin. Get free access risk-free for 30 days, just create an account. If these fees average 4 per service call and the company wants to earn 30 profit on each hour billed for repair services, you can use the same formula to arrive at the cost-plus pricing for the repair service. Cost-plus pricing 78 *.25, cost-plus pricing.50, using cost-plus pricing, you determine the price of the printer to.50.
However, your company definitely plans to earn money from the sale of the printers. If you sold the printer at 78 your company would break even, meaning there would be no profit or loss. After doing some research, you determine that the best method for pricing the printer is the cost-plus method. There are many strategies you can apply to set a price. Cost-plus pricing is a straightforward and simple way to arrive at a sales price by adding a markup to the cost of a product. For instance, let's say your company offers a repair service for small businesses who own your printers. So, you implement the following formula for cost-plus pricing to arrive at the sales price: Break-even price * profit margin goal. When you pull all of the expenses together to determine the cost of each printer, you determine that each one will cost 78 to produce. Cost-plus pricing break-even price * profit margin goal.