Cost-Plus Pricing

Cost-plus pricing is a pricing strategy in which the cost of production is calculated and a markup is added to determine the final price of a product or service. In aviation context, cost-plus pricing is commonly used in government contracts for aircraft manufacturing and maintenance. The government reimburses the contractor for the actual cost of production plus a predetermined profit margin. This pricing strategy ensures that the contractor is able to cover all costs and make a profit, while also providing transparency to the government regarding the cost of the project.
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