Grace Creek Vineyard and Farm will use cost plus pricing strategy as the means of setting the prices for the red wine and the jalapeno pepper relish. The primary objectives for using cost plus pricing strategy are to gain a market share and make a profit. Cost plus pricing ensures that prices are high enough to meet profit goals. The cost plus pricing is determined by adding the direct costs of materials, direct labor costs, and overhead to determine what it costs the company to offer the products then adding a percentage to determine the selling price. The biggest advantage of this pricing strategy is that the company knows the exact amount of expenditure that incurred in making the products and therefore can add the profit margin accordingly.
