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Full cost or mark up pricing or cost plus pricing method:
In this method the marketer estimates the total cost of producing or manufacturing the product and then adds it a mark up or the margin that the firm wants. This is indeed the most elementary pricing method and many of services and projects are prices accordingly.
This method assumes that no product is sold at a loss. This method is used when there is no competition in the market or when the cost of production of a product of all the manufactures is almost equal and the margin of profit of all the manufacturers is also equal. This method is used by retail traders also. This method of pricing is based on a simple arithmetic of adding a fixed percentage of profit to the unit cost. Thus retail price of a product can be the cost of manufacture is also known as the sum of margin method'.
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