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Cost Based Pricing

Cost based pricing is determined by first figuring out how much it costs to make a product. Then, from there, a company can determine how much profit they want to see from each unit sold. A common cost based prices item is a cell phone or other new technology. Typically, there are a fair amount of people who are willing to pay high dollar to have the latest iPhone. Profit margins can quickly rise for products such as this. However, you have to do the adequate research to make sure that the price at which you sell your product is a price at which people will by the product. There are ways to reduce your cost which in turn can reduce the price you charge. We have seen this with Wal-Mart. They are always working to offer the lowest prices. Cost based pricing is an easy technique and is a good starting point used to set the floor price when determining your end price. 

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