I admit that the approach has practical advantages. First, it depends on hard cost data, not on assumptions. It also guarantees the seller a positive unit contribution on every unit sold. Finally, if competitors use the same approach to set their prices, and also have similar buying power , this method minimizes price competition for the product and encourages the sellers to compete on aspects other than price. Cost-plus pricing can create a de facto price cartel , with the resulting stability and predictability. All these factors explain why this method is so popular.
