## Cost-based Pricing

Each of the three cost-based pricing methods described begin with a product cost subtotal. To calculate product cost you need to include the costs of operating the business, which could include raw materials, transportation, advertising, wages, rent and other costs incurred in producing the product. Once you have a base cost, then add the profit level you want for the business to the product cost subtotal to determine your product price. The amount of profit you add to the product cost subtotal can be set according to the following three different methods:

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