Cost$-$based pricing is a pricing strategy where a product or service's price is

determined by adding a markup to the total costs incurred in producing and

delivering it$.$ This approach aims to cover all expenses while generating a desired

profit level. Companies factor in both fixed and variable costs, such as fixed costs

like rent, salaries, and insurance, and variable costs like raw materials, packaging,

and direct labor. The process involves calculating total costs, adding a markup to

achieve the desired profit margin, and setting the price. For example, if a company

incurs $$50$ in fixed costs per unit and $$30$ in variable costs, and wants to add a

$20\%$ markup, the price would be $$96.$ This pricing model ensures all costs are

covered while allowing the company to make a profit.