What is cost based pricing method?

Answer 1

Under cost based pricing method ,costs incurred in producing , & distributing the product is identified as direct costs & indirect costs . All the direct costs are calculated on goods sold (called prime costs) & added with indirect fixed & variable production overheads, administrative overheads, & selling & distribution overheads. when total cost of sales is arrived, a certain percentage of profits (depending on economic condition of customers , competitive factors , subsidies available , & return on investment expected ) is charged on total cost of sales. If subsidies fro government is available per unit of product it will be set-off against total cost to base profit percentage on net cost.

Answer 2

Its the most commonly used here pricing is done on the basis of cost variables. The cost of manufacturing/ procurement/ inventory are held more important than other factors while determining the pricing. Here the goal is sustaining into the industry.

Answer 3

Cost based pricing method if is in the term of payment method in localy use. Thes cost based pricing means price in local area