In this episode of Pricing College – we have previously introduced cost plus pricing – but now want to cover 5 reasons why it is a flawed pricing system.

TIME-STAMPED SHOW NOTES:

[00:45] We had previously discussed what is cost plus pricing.
[01:10] How do you actually allocate costs – not as easy as you might expect.
[01:30] Aidan says it tends to lead to a lack of innovation or value adds.
[02:30] Just making up a margin makes very little sense. A made up margin goes against the complex cost accounting.
[03:10] If buyers know you use cost plus pricing – they want to push you down to your actual costs.
[03:55] Cost plus pricing does not consider the market dynamics.
[04:20] You will likely undersell your product.

LINKS MENTIONED IN TODAY’S EPISODE:

Cost plus pricing

Problems with cost plus pricing.