Definition

Cost-plus pricing

Adding a standard markup to the cost of the product is called is cost-plus pricing (or markup pricing).  Construction companies, for example, submit job bids by estimation gather total project cost and adding a standard markup for profit. Lawyers, accountants, and other professionals typically price by adding a standard markup to their costs. Some sellers tell their customers they will charge cost plus a specified markup; for example, aerospace companies often price this way to the government.

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