In which pricing strategy is a fixed amount added to the cost of the product?

The pricing strategy where a fixed amount is added directly to the cost of the product is known as a fixed dollar amount pricing strategy. This approach involves determining the cost to produce a product and then simply adding a predetermined dollar amount to that cost to arrive at the selling price. This method is straightforward and allows for consistent pricing across different products or services, as it focuses solely on the added margin without taking into account other factors such as competition or perceived value.

While cost-plus pricing and markup pricing may seem similar or related, they generally involve calculations based on percentages rather than fixed amounts. Cost-plus pricing typically consists of adding a percentage markup on the cost of the product. Markup pricing refers to the same concept but emphasizes the difference between cost and selling price, often associated with retail.

Value-based pricing, on the other hand, hinges on the perceived value of the product to the customer rather than the cost to produce it, which can lead to pricing strategies that are not typically reflective of the actual cost incurred. Thus, the correct context for a fixed amount being added to the cost clearly aligns with the fixed dollar amount pricing strategy.