Cost-plus pricing is a strategy where you set the selling price by adding a fixed percentage markup to the total cost of producing a product or delivering a service. It guarantees a profit on every sale and is straightforward to implement, making it one of the most widely used pricing methods.

The main advantages are simplicity, predictability, and fairness. Costs are transparent, profit is guaranteed on every unit, and prices adjust naturally as costs change. It is especially useful for custom work, government contracts, and situations where value-based pricing is difficult to determine.

Cost-plus pricing ignores market demand and competitor pricing, potentially leaving money on the table if customers would pay more, or pricing you out if competitors are cheaper. It also provides little incentive to reduce costs since profits are a fixed percentage of spending.