Cost-plus pricing adds a chosen markup to the cost of one unit. It is simple to calculate and makes cost changes easy to trace through to price.
The demo stacks cost and markup into a selling price. A 50% markup on cost is different from a 50% margin on the selling price.
The formula does not include willingness to pay or competing alternatives. Test the final price in the market.
When to use
Use to set a floor for products with clear costs, then validate demand separately.