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Pricing Your Product or Service
4. Marking Up
4.1 Cost-plus pricing is a traditional method, usually based on two elements:
- The mark-up you must add to the cost to make the desired profit, and
- The mark-up used by competitors.
4.2 Ensure all your costs (see 2) have been factored in before applying the mark-up.
- If the final price looks uncompetitive, review the size of the mark-up. Never obliterate the mark-up to make the price competitive. Try to change the cost base rather than give up potential profit.
4.3 Different products and businesses apply very different mark-ups. For example, retail mark-ups include:
- Fridges: cost plus 25 per cent.
- Branded clothing: cost plus 135 per cent.
- Jewellery: cost plus 250 per cent or more.
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