Which pricing strategy involves setting prices based on a fixed markup over costs?

Cost Plus Pricing is a pricing strategy where a business determines the cost of producing a product or service and then adds a fixed percentage or amount on top of that cost to arrive at the selling price. This method is straightforward and ensures that all costs are covered while also generating a profit margin.

Using this strategy, companies can easily calculate prices based on their production costs, which allows for consistency in pricing while providing a clear link between costs and selling prices. This approach is particularly beneficial for businesses with stable costs and predictable demand, as it simplifies the pricing process and reduces the need for extensive market analysis.

In contrast, Psychological Pricing aims to influence customer perception by setting prices that end in .99 or using other strategies that appeal to the emotional aspects of purchasing. Premium Pricing focuses on setting higher prices to reflect the perceived value of a product or service, often used for luxury items. Promotional Pricing involves temporarily reducing prices to stimulate sales or attract customers. These strategies do not involve a straightforward markup over costs in the way that Cost Plus Pricing does.