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Cost-plus pricing
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== Example == A shop selling a vacuum cleaner will be examined since retail stores generally adopt this strategy. Total cost = $450 Markup percentage = 12% ''Markup price = (unit cost * markup percentage)'' Markup price = $450 * 0.12 Markup price = $54 ''Sales Price = unit cost + markup price'' Sales Price= $450 + $54 Sales Price = $504 Ultimately, the $54 markup price is the shop's margin of profit. Cost-plus pricing is common and there are many examples where the margin is transparent to buyers.<ref>{{Cite news |last=Dholakia |first=Utpal M. |date=2018-07-12 |title=When Cost-Plus Pricing Is a Good Idea |url=https://hbr.org/2018/07/when-cost-plus-pricing-is-a-good-idea |access-date=2025-03-18 |work=[[Harvard Business Review]] |language=en |issn=0017-8012}}</ref> Costco reportedly created rules to limit product markups to 15% with an average markup of 11% across all products sold.<ref>{{Cite web |last=Gabler |first=Neal |date=2016-12-03 |title=Inside Costco: The Magic in the Warehouse |url=https://fortune.com/longform/costco-wholesale-shopping/ |access-date=2025-03-18 |website=[[Fortune (magazine)|Fortune]] |language=en}}</ref>
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