Practical Sales Training™ > How To Convert > Cost Plus Pricing
What is it?
Cost Plus Pricing is all about having transparency when it comes to your margin and using this to secure buyers who are looking for a great deal but might be suspicious of how low a price can be.
Why does it work?
It works because it captures buyers who are looking for a great deal (such as in the example below of Cost Plus Drugs from Mark Cuban) Many industries can be plagued with high prices and bad deals – so to be a transparent and affordable alternative puts you in the realms of being a no brainer.
How can you use it?
You need to be aware that being the lowest price isn’t ALWAYS going to attract more buyers to you, but in industries where a degree of unfairness has crept in, you have an opportunity to seize some attention and some of the market.
Hypothetical Example:
A small furniture retailer wants to stand out in a market where buyers often suspect they’re being overcharged. 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 that costs £400 from the supplier is listed at £440 with the pricing breakdown shown on the price tag.
This transparency wins trust from customers who appreciate knowing exactly what they’re paying for. As a result, the retailer attracts buyers who might otherwise shop around or haggle, because they can see the price is fair.
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