Practical Sales Training™ > How To Convert > Cost Plus Pricing
Cost Plus Pricing
What Is It?
Cost Plus Pricing means showing your buyer exactly what you pay. Then you add a clear, honest margin on top. It works because it removes the guesswork buyers usually feel around a price tag. Instead of wondering if they’re being overcharged, they can see the maths for themselves.
Why Does It Work?
It works because it captures buyers actively hunting for a fair deal. Many industries carry a reputation for high prices and bad deals. So a transparent alternative stands out fast. Once your buyer sees the real cost, the decision feels like a no brainer.
How Can You Use It?
Being the cheapest option isn’t always what wins buyers over. But in industries where unfair pricing has crept in, transparency becomes a genuine opportunity. So look at where your market feels overpriced. Then show your buyer exactly what you charge and why.
When It Works Best
This works best in industries buyers already distrust, like trades or retail. It also helps when your actual margin is genuinely reasonable. Because the transparency needs to hold up under scrutiny.
When It Becomes Dangerous
This becomes risky if your margin isn’t actually fair once buyers see it plainly. A buyer who sees a padded markup feels tricked twice over. So only use this if you’re happy to let buyers check every number.
Common Mistakes
Publishing A Breakdown You Can’t Defend
Don’t publish a cost breakdown you can’t defend. If a buyer questions one figure, the whole approach falls apart instantly.
Relying On Transparency Alone
Never assume transparency alone wins the sale. Buyers still care about quality and service. The pricing model earns trust, but it doesn’t replace the rest of your offer.
Cost Plus Pricing – An Example
A Furniture Retailer’s Pricing Model
A small furniture retailer wants to stand out in a market where buyers often suspect they’re being overcharged. So they introduce Cost Plus Pricing:
“We charge you exactly what we pay our suppliers, plus a transparent 10% margin for our service. No hidden markups, no surprises.”
A dining table costing £400 from the supplier gets listed at £440. The pricing breakdown sits right on the price tag.
This transparency wins trust from buyers who want to know exactly what they’re paying for. As a result, the retailer attracts people who might otherwise shop around or haggle. They can see the price is fair.
A Real World Example
Mark Cuban’s Cost Plus Drugs uses this exact model at scale. It shows customers the real cost of medication alongside a transparent markup.
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