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Cost pricing or cost plus pricing

Definition updated on November 2023

What is cost pricing or cost plus pricing and how is it calculated?

Cost pricing, also known as cost-plus pricing, is a pricing strategy where the selling price of a pair of sneakers is determined by adding a markup percentage to the total cost incurred to acquire or hold the sneakers. The total cost includes the purchase price of the sneakers, any additional costs such as shipping, taxes, and fees, and any other costs associated with holding the inventory such as storage costs. The markup percentage is the percentage of the total cost that the seller adds to the cost to determine the selling price. For example, if the total cost to acquire a pair of sneakers is $200, and the seller decides to add a markup of 20%, the selling price would be $200 + ($200 * 20%) = $240. In the sneaker resell market, cost pricing is a common strategy used by sellers to ensure that they cover all their costs and make a profit on each sale. For beginners in the sneaker resell market, cost pricing can be a useful strategy to ensure that all costs are covered and a profit is made on each sale. However, it is important to carefully consider the markup percentage as pricing too high can make it difficult to compete with other sellers, while pricing too low can result in lower profits. Additionally, it is important to regularly review and update the total costs and markup percentage to reflect any changes in the market.

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