Cost-plus pricing*
The price you charge for your product or service determines how protable your
business is, and how customers view your business. It’s one of the most important
decisions you’ll make..
Obviously your prices will need to be high enough to ensure
you cover all your costs and operate at a prot. But there
is more to choosing a price than that. Your pricing strategy
will also be determined by a number of other factors, includ-
ing the prices your competitors charge, prevailing industry
conditions, and whether you plan to position yourself as a
value-for-money supplier, a provider of quality goods and
services, or somewhere in between.
COSTS PER ITEM
Raw Materials per item
Freight
Packaging
Labor
Other
Total Cost
Required Margin
Current Tax Rate (%)
This cost-plus pricing model takes the cost of producing
your product or service and adds an amount that you need
to make as prot, usually expressed as a percentage of the
cost. Cost-plus pricing ignores your business image and
market position and is best suited to businesses with a large
product range and high sales volumes, or markets where
there is a lot of price competition.
Sales Price:
excl Tax
$ 110.00
$ 1.00
$ 1.00
$ 132.00
$ 2.00
$ 1.00
$ 120.00
$ 115.00
$ 5.00
10.00
Important Disclosures
*These tools and other information are copyrighted 2019 by The Small Business Company, Ltd. (“TSBC”) and used under license by TD
Bank, NA. This information has been prepared by TSBC for general informational purposes only. TSBC is solely responsible for the
content. Any opinions expressed herein belong to TSBC and do not necessarily reect the opinions of TD Bank, N.A. or any of its aliates,
directors, ocers or employees. These materials are not intended to provide legal, tax or accounting advice or to suggest that you engage
in any specic transaction. TD does not endorse or guarantee the accuracy of the information provided by TSBC, or any other third party
and the information does not necessarily represent TD’s business practices or experience. Neither TD nor TBSC makes any representation
or guarantee as to the accuracy and/or reliability of such information nor shall any of TD or TBSC or their respective employees be liable
for any loss or damages suered as a result of any use of such information. Please consult your own counsel, accountant or other advisor
regarding your specic situation. Any reliance upon any such information is solely and exclusively at your own risk.
Under no circumstances should any information contained in the materials presented be used or considered as an oer or commitment, or a
solicitation of an oer or commitment, to participate in any particular transaction or strategy or should it be considered legal or tax advice.
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