Explain what is the Rate Of Return Pricing Method in Pricing Decisions ( Part 3)
In the earlier article, we have dealt with the importance of making the correct pricing decisions and the factors to consider before making a pricing decision.
This article refers to the various methods of pricing which include the following:
- Full Cost Plus pricing;
- Variable/Marginal Cost Plus pricing
- Rate of Return Pricing;
- Break-even Pricing;
- Minimum Pricing;
- Standard Cost Plus
Salient Points on Rate Of Return Pricing: |
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Simple Illustration: |
Capital invested / employed $2,000,000 Target return 10% Estimated costs $500,000 Mark up = 10% x $2,000,000 $500,000 =40% |
Related Posts
- Explain what is Full Cost Plus Pricing Method in Pricing Decisions ( Part 1 )
- Explain what is Marginal or Variable Cost Plus Pricing in Pricing Decisions ( Part 2 )
- Details Of Ninth Schedule Companies Act 1965(Act No 125)
- Explain what is break-even pricing method in Pricing Decisions ( Part 4
- Explain what is Minimim Pricing Method in Pricing Decisions( Part 5)
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