This tool facilitates a pricing strategy where a fixed percentage markup is added to the cost of goods or services to determine the selling price. For example, if a product costs $50 to produce and the desired markup is 20%, the selling price would be $60.
This method offers simplicity and transparency, ensuring a consistent profit margin on each sale. It’s particularly useful for businesses with predictable costs and in industries where cost-plus contracts are common. Historically, this pricing model has been favored in sectors like construction and government contracting, where transparency and cost recovery are paramount.
