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Investments glossary

Variable Cost-Plus Pricing


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Quotes of the day:

Doctors pour drugs of which they know little, to cure diseases of which they know less, into patients of whom they know nothing.

— Moliere

Variable cost-plus pricing is a pricing method whereby the selling price is established by adding a markup to total variable costs. The expectation is that the markup will contribute to meeting all or a part of the fixed costs and yield some level of profit. Variable cost-plus pricing is particularly useful in competitive scenarios, such as contract bidding, but it is not suitable in situations where fixed costs are a major component of total costs.

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