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What Is Cost-Plus Pricing? Why Do Some Firms Use Cost-Plus

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What is cost-plus pricing? Why do some firms use cost-plus pricing even when the firms' managers have the resources to devise a pricing strategy that would result in greater profits?


Definitions:

Social Insurance Taxes

Taxes collected to fund public insurance programs, such as retirement pensions, unemployment benefits, and health insurance schemes.

State and Local Governments

State and local governments refer to the administrative bodies governing regions below the national level, responsible for local laws, education, transportation, and more.

Federal Mandate

A requirement or order from the federal government that state or local governments, or private parties must follow, often with accompanying funds.

Income Taxes

Taxes levied by governments on individuals or businesses based on their net income or profit.

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