Kostnaðarplús

Kostnaðarplús is an Icelandic term that translates to "cost-plus" in English. It refers to a pricing method where the price of a product or service is determined by adding a fixed percentage or amount to the actual cost of production or delivery. This approach is commonly used in situations where the exact costs are difficult to predict or when there is a need for a guaranteed profit margin for the supplier.

In a cost-plus arrangement, the buyer agrees to pay the seller for all allowable costs incurred in the project or service, plus a predetermined profit margin. Allowable costs typically include direct expenses such as materials, labor, and overhead, while the profit is usually calculated as a percentage of these costs. This method provides cost certainty for the buyer regarding the profit component, while the seller is assured of recovering their expenses and making a profit.

Cost-plus pricing can be beneficial in complex projects, research and development, or when dealing with government contracts where the scope may evolve. However, it can also disincentivize efficiency for the seller, as higher costs lead to higher profits. Buyers may prefer fixed-price contracts for greater cost predictability, but cost-plus can be more suitable when risks are high or unforeseen issues are likely. The specific terms and conditions of what constitutes an "allowable cost" and the profit percentage are crucial elements to be clearly defined in any cost-plus agreement.