Economics Online Statistics Home Definitions Videos Quizzes Questions

Cost plus pricing

News


Gender pay gap

80% of UK companies and public sectors organisations pay women less than men.

Read more

Cost plus pricing - definition

Cost plus pricing is a pricing method that attempts to ensure that costs are covered while providing a minimum acceptable rate of profit for the entrepreneur. It is calculated by adding a fixed mark-up to average (or unit) costs of production.

Cost-plus pricing is common in markets where a few firms dominate (an oligopolistic market) and share similar production costs. In this case, cost-plus pricing provides a convenient rule for firms and reduces the risks associated with price competition.

Game theory suggests that if firms are able to tacitly collude by sharing a 'pricing methods' then collusion is harder to detect and difficult for regulators to penalise.




WTO rules

What exactly is the 'most favoured nation' rule?

Read more
Read more
Model agencies collude to fix rates

Regulators find leading model agencies guilty of price fixing.

Read more
Read more
Read more
Read more
Customs unions

Costs and benefits of customs unions.

Read more
New materials

Multiple choice papers for Paper Three.

Read more
Savings ratio

Savings ratio falls to lowest level on record.

Read more