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Cost-Plus or Value-Based: Who Wins?

May 2015 Pricing 4 Comments

Cost-plus pricers believe in understanding the cost of making a product and then adding a profit margin on top of the cost to arrive at the price of the product. Value-based pricers on the other hand are not keen at looking at cost or a target mark-up. Instead they focus on realizing the value that the product brings to the customer and then pricing it according to the value.

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“China cut interest rates for the third time in six months on Sunday, and analysts predicted policymakers would relax reserve requirements and cut rates again in the coming months.” Reuters

  1. Incentive breeds change.
  2. Barriers sometime come in the form of profit for one group.
  3. Too much regulation can cause dissent.
  4. Growth can derive from ease of charges.
  5. Fear of disorder may cause concentrated wealth.
  6. Dissemination of new profit opportunities dispels greed.