Keystone pricing is a simple pricing strategy in which a business sets the selling price for a product at double the cost price. In other words, the price is marked up by 100%, making the selling price equal to twice the cost of acquiring or producing the item.
The formula for Keystone Pricing is:
Selling Price = Cost Price × 2
For example, if a product costs $50 to produce or acquire, the keystone price for that product would be $100.
This pricing approach is straightforward and easy to calculate, making it commonly used in retail and other industries. While Keystone Pricing provides a consistent and easy-to-understand markup, it may not always account for variations in market demand, competition, or other factors that influence pricing decisions. Businesses often use a combination of pricing strategies based on their specific market conditions and goals.