Marginal cost pricing

In retail, marginal cost pricing refers to setting the price of a product based on the additional cost incurred to produce or procure one more unit for sale. It involves considering the variable costs associated with producing or obtaining an additional item, such as the cost of goods, labor, and other directly related expenses. The objective is to determine a selling price that aligns closely with the incremental cost of adding one more unit to the inventory. This pricing strategy aims to ensure that each sale contributes to covering the variable costs associated with the product, thus optimizing profitability and resource allocation.