Cost Plus Pricing

Use cost plus pricing to calculate and analyze the profit margin that your company earns for an item in terms of the pricing charges that the item references.

Use it to optimize pricing so it meets the pricing objective you define.

If you use cost plus pricing, then Oracle Pricing calculates the item price according to attributes you set on the price list and the cost list. The cost of an item is the sum of the charges that you define for the item on these lists. Pricing includes only the charges you enable for cost plus pricing as part of the cost when it calculates price.

Here's an example that uses cost plus pricing.

Cost Plus Pricing	Cost Amount	Cost Calculation Type	Markup	Selling Price
Contains a check mark	345	Fixed	55	345 plus 55 equals $400
Does not contain a check mark	345	Fixed	55	345

Assume you typically sell a cellular phone according to the price you define in the Base Price attribute of the price list of $445, and you set the Calculation Method in the price list to Price. You offer the phone to your customer for $400 using cost plus pricing. Here's your setup.

1. In the price list, set these attributes.

   Attribute	Value
   Calculation Method	Cost
   Calculation Type	Markup Amount
   Cost Calculation Amount	55

2. In the cost list, set these attributes.

   Attribute	Value
   Cost Calculation Type	Fixed
   Cost Amount	345
   Cost Plus Pricing	Add a check mark

Here's the calculation that Pricing will do at run time.

• Cost of $345 plus markup of $55 equals a base price of $400