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.

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.

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 …

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 …

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 …

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 …

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 …

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 …

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Examples include manufacturing and service industries.

Yes, value based pricing is an alternative method for determining prices.

Cost-plus pricing is a strategy in which the selling price of goods and services is determined by adding a specific fixed percentage to the singular product's unit cost.

The markup percentage can be derived by using the firm's target rate of return.

Variable cost-plus pricing works well in competitive scenarios such as contract bidding, but it's not suitable for situations where fixed costs are a major component of total costs.

Variable cost-plus pricing is a pricing method in which the selling price is established by adding a markup to total variable costs.

Cost-plus pricing exists because it allows companies to generate profit margins that reach their target rate of return and maximize overall profits.

You must estimate contribution to fixed costs per unit.

Adding means to increase the price by a certain percentage or dollar amount.