Cost-based evaluating is a valuing technique used to decide the selling cost of an item founded on the expense of making that item. To arrive at the selling price, a margin known as a markup percentage is added to the total cost.
Simply put, cost based pricing is a pricing strategy in which a company increases the price of a product by deducting the cost of manufacturing and production. The strategy frequently involves increasing one unit's production costs by a predetermined percentage.
Surprisingly, cost-based pricing looks like this: adding a standard margin to the cost of a product or service after calculating its cost. If a widget costs $2.50 to make, for instance, a widget with a standard margin of 50% would cost $5.00.
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