The Role of Costs In Pricing

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Many businesses use cost plus pricing to determine their prices but what is the role costs in pricing?

Cost-plus pricing is one of the most widely used methods for setting prices, but it also more often to not leads to over- and underpricing. While understanding costs is important to having a successful Pricing Strategy and understanding your profit story, relying on them too heavily puts your business at risk. It begs the questions what is cost-plus pricing. what are the disadvantages, why do people use it and what should you base your prices on instead.

We look at that and more in this episode.

Podcast Highlights:

• 0:00 Intro
• 03:03 Understand What Cost Based Prices are
• 5:00 Limits Flexibility in Your Business
• 06:35 Competition in the Marketplace
• 08:40 Why do People Use It
• 10:16 Costs shouldn't Determine Your Prices
• 12:03 Understanding the Profit Story
• 13:10 Wrapping it Up

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