This article explains how Cost-Plus Pricing and Market-Based Pricing work in CoreBridge and outlines when each method is most effective. Both options are available within assemblies, and each offers a different approach for calculating retail prices. Cost-Plus methods incorporate cost directly into pricing, while Market-Based methods focus on predetermined market or retail values. Understanding the difference helps you choose the model that aligns best with production needs, profit goals, and pricing strategy.
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Understanding Cost-Plus Pricing
Cost-Plus Pricing uses your actual material, labor, and machine costs to calculate a price. CoreBridge stores all cost values for reporting and then applies a margin or markup to determine the retail price. This approach ensures your pricing always accounts for true production costs. For more information, please see Cost Based Pricing.
Cost-Plus Pricing includes two options: Cost Plus - Margin and Cost Plus - Markup.
How Cost-Plus Pricing Works
Cost-Plus Pricing is cost-driven. The system:
- Adds material, labor, and machine costs together.
- Establishes the total cost.
- Applies either a margin or markup percentage from your pricing tables.
- Adds any optional custom charges, such as custom waste.
This method is commonly used when production costs fluctuate, when maintaining consistent profit percentages is important, or when you want pricing to automatically adjust with changes in materials or labor.
Cost Plus - Margin
This method applies a margin percentage to total cost to calculate a price. Margin is based on the portion of the final price that becomes profit. Margin tables allow you to create different pricing levels based on total square footage.
Cost Plus - Markup
This method applies a markup percentage to total cost. Markup represents a percentage added on top of cost and is commonly used when you want predictable price increases over cost.
Understanding Market-Based Pricing
Market-Based Pricing uses predefined retail values rather than production cost to calculate a price. Material, labor, and machine costs are still stored for reporting, but they are not used in the pricing formula. This method is ideal when you want prices that follow market expectations, competitive benchmarks, or fixed retail pricing schedules. For more information, please see Market Based Pricing.
Market-Based Pricing includes two options: Market - Assembly Pricing and Market - Component Pricing.
Market - Assembly Pricing
This method calculates price by multiplying quantity by a unit price from the selected pricing tier. It does not use cost for the retail price calculation. It works well when you want pricing consistency regardless of internal production variances.
Market - Component Pricing
This method calculates price by adding the retail price of each component in the assembly. Like Market – Assembly Pricing, cost is stored but not used in the retail price.
When to Use Each Pricing Method
Choosing between Cost-Plus and Market-Based Pricing depends on your goals, consistency needs, and production realities.
Use Cost-Plus Pricing When:
- You want pricing that always covers cost.
- Material, machine, or labor costs fluctuate regularly.
- You need consistent profit percentages across jobs.
- Reporting based on true production cost is a priority.
- You prefer pricing that adjusts automatically with changes to your components.
Use Market-Based Pricing When:
- You want retail prices driven by market expectations or competitive benchmarks.
- Your pricing strategy is based on fixed price lists.
- You want simplified pricing that does not vary based on internal costs.
- You want consistent customer-facing prices regardless of production method.
- You're selling products where market rates are well established (e.g., garments, promotional items, pre-defined products).