What is cost-plus pricing?

Cost-plus pricing adds a fixed percentage mark-up to the unit cost to set the selling price. The method is simple and covers costs, but it ignores what customers will pay.

A stool costs £12 to make, and the maker adds a 40% mark-up. What is the cost-plus selling price?

The selling price is £16.80. The working is £12 × 1.40 = £16.80.

What is contribution pricing?

Contribution pricing sets a price above the variable cost per unit, so each sale contributes towards fixed costs. The method suits special orders or spare capacity.

CCEA A-Level Technology and Design 8900

Material Selection and Wood

Topic overview Material selection criteria Physical and mechanical properties Hardwoods, softwoods and timber stock sizes Pine, ash, beech, oak and mahogany Manufactured boards Wood finishes, veneers and laminates

Metals

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Plastics

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Composite and Emerging Materials

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Design for Manufacture, Quality and Safety

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Electronic Control SystemsOption A

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Microelectronic Control SystemsOption A

Topic overview Microcontroller systems, ADCs and DACs Strain gauges and bridge circuits Optical switches, encoded discs and Schmitt triggers Op-amp amplifiers and gain Zener diodes and voltage regulators Karnaugh maps and binary counters Seven-segment, LCD and dot matrix displays PIC flowcharts and programming DC motors, stepper motors and driver circuits

Mechanical and Pneumatic ComponentsOption B

Topic overview Open and closed loop mechanical and pneumatic control Safe working with compressed air and mechanisms Levers, linkages and moments Gear types and gear trains Pulleys, belts, chains and shaft fixings Cams, cranks and converting motion Compressed air supply and pneumatic valves Cylinders, shuttle valves, restrictors and reservoirs Pneumatic circuits for logic, timing and speed control

Mechanical and Pneumatic SystemsOption B

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Designing and Manufacturing ProductsOption C

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Product Design in Industry and SocietyOption C

Topic overview Life-cycle environmental impact and climate change The 6Rs, waste and environmental legislation Sustainable metals, plastics and degradable polymers Product life cycles, consumer types and relaunches CAD, CAM, 3D scanning and quick-change moulding Market pull, technology push and market strategy Price, place and promotion Jigs, fixtures and ICT in quality control Design for maintenance, inclusion and scale production Rendering, typography and presentation Dyson, Baylis, Memphis and Apple

Product Development

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Product Design in Industry and Society

Price, place and promotion

3 things to know
A2 1

Overview

The four Ps, price elasticity with a worked example, cost-plus, contribution and perceived value pricing, skimming and penetration, physical placing, advertising, sales promotion and trade fairs.

What you need to know

Answer each one before you reveal it.

Your recallNot started

Key term

What are the four Ps of the marketing mix?

Key term

What is price elasticity of demand?

Key term

A 10% price rise causes demand for a product to fall by 25%. What is the price elasticity of demand, and is demand elastic?

Questions from this subtopic

Each one with the model answer underneath.

1
What are the four Ps of the marketing mix?
Model answer
The four Ps are product, price, place and promotion. A company balances all four to reach its target market.
2
What is price elasticity of demand?
Model answer
Price elasticity of demand measures how much the quantity demanded changes when the price changes. Demand is elastic if quantity changes proportionally more than price.
3
A 10% price rise causes demand for a product to fall by 25%. What is the price elasticity of demand, and is demand elastic?
Model answer
The price elasticity of demand is −2.5, so demand is elastic. The working is −25% ÷ 10% = −2.5.
4
What is cost-plus pricing?
Model answer
Cost-plus pricing adds a fixed percentage mark-up to the unit cost to set the selling price. The method is simple and covers costs, but it ignores what customers will pay.
5
A stool costs £12 to make, and the maker adds a 40% mark-up. What is the cost-plus selling price?
Model answer
The selling price is £16.80. The working is £12 × 1.40 = £16.80.
6
What is contribution pricing?
Model answer
Contribution pricing sets a price above the variable cost per unit, so each sale contributes towards fixed costs. The method suits special orders or spare capacity.

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Material Selection and Wood

Metals

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Composite and Emerging Materials

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