This instrument facilitates a pricing technique the place a set proportion markup is added to the price of items or providers to find out the promoting value. For instance, if a product prices $50 to supply and the specified markup is 20%, the promoting value could be $60.
This technique provides simplicity and transparency, guaranteeing a constant revenue margin on every sale. It is notably helpful for companies with predictable prices and in industries the place cost-plus contracts are frequent. Traditionally, this pricing mannequin has been favored in sectors like development and authorities contracting, the place transparency and price restoration are paramount.