kostnadsprising

Kostnadsprising, often translated as cost-based pricing, is a pricing strategy in which the price of a product or service is determined primarily by the costs incurred to produce it, with an added markup to ensure a desired profit. The approach emphasizes covering both fixed and variable costs and achieving a target margin, rather than matching competitors or maximizing perceived value.

In practice, the price is typically derived from the cost per unit, including allocated fixed costs and direct variable costs, and is then adjusted by a markup or profit margin. Common methods include cost-plus pricing, where Price = Cost per unit × (1 + markup), and variations using standard cost systems or absorption costing to allocate overhead to units. Some firms also consider marginal cost in short-run decisions, especially for incremental sales or capacity constraints.

Advantages of kostnadsprising include its simplicity and transparency, the ability to ensure costs are covered, and predictability of margins. It can be appropriate in industries with stable costs, regulated pricing, long product life cycles, or when products are highly commoditized and differentiating based on value is difficult. Disadvantages include the potential to ignore customer willingness to pay and market demand, a risk of over- or under-pricing if costs or competitive conditions change, and susceptibility to cost inflation driving higher prices even when customers place lower value on the offering. For these reasons, many firms supplement kostnadsprising with market-based or value-based considerations.

See also: cost-plus pricing, price elasticity, cost accounting.