cost-plus: meaning, definition, pronunciation and examples
C1-C2 / Low FrequencyBusiness, Commerce, Government Contracting, Technical
Quick answer
What does “cost-plus” mean?
A pricing method where the selling price is determined by adding a fixed percentage or amount of profit to the actual cost of production.
Audio
Pronunciation
Definition
Meaning and Definition
A pricing method where the selling price is determined by adding a fixed percentage or amount of profit to the actual cost of production.
More broadly, any agreement or arrangement where payment is based on incurred costs plus an additional, predetermined fee or profit margin. Can function as an adjective ('a cost-plus contract'), a noun ('They agreed to a cost-plus'), or attributively ('cost-plus pricing').
Dialectal Variation
British vs American Usage
Differences
No significant lexical or grammatical differences. The term is standard in business English in both varieties.
Connotations
Neutral and technical in both. In critical contexts, can imply a lack of incentive for the supplier to control costs.
Frequency
Similar frequency in relevant business/contracting contexts in both the UK and US.
Grammar
How to Use “cost-plus” in a Sentence
[cost-plus] + noun (e.g., cost-plus contract)on a [cost-plus] basisagree to [cost-plus]negotiate a [cost-plus]Vocabulary
Collocations
Examples
Examples of “cost-plus” in a Sentence
verb
British English
- (Not standard as a verb)
American English
- (Not standard as a verb)
adverb
British English
- (Not standard as an adverb)
American English
- (Not standard as an adverb)
adjective
British English
- The MOD awarded a cost-plus contract for the new naval system.
American English
- The Pentagon often uses cost-plus agreements for cutting-edge R&D.
Usage
Meaning in Context
Business
The manufacturer proposed a cost-plus deal to cover the volatile raw material prices.
Academic
The paper examines the efficiency implications of cost-plus versus fixed-price contracting in public infrastructure.
Everyday
Rarely used in everyday conversation outside of specific contracting discussions.
Technical
The CPIF (Cost-Plus-Incentive-Fee) contract structure includes performance-based bonuses.
Vocabulary
Synonyms of “cost-plus”
Strong
Neutral
Weak
Vocabulary
Antonyms of “cost-plus”
Watch out
Common Mistakes When Using “cost-plus”
- Using it as a verb (e.g., 'They will cost-plus it'). It is primarily a noun/adjective. Confusing it with 'mark-up', which is a simpler retail concept.
FAQ
Frequently Asked Questions
It is common in specific sectors like defence, construction, and R&D, where project costs are difficult to estimate upfront. It is less common in consumer retail.
The buyer (or client) bears the risk of cost overruns, as they must reimburse all allowable costs plus pay the agreed profit fee.
The main opposite is a 'fixed-price' or 'lump-sum' contract, where the price is set in advance and the seller bears the risk of cost overruns.
No, it is not standard English to use 'cost-plus' as a verb. It functions as a noun (the agreement) or an adjective (describing the contract/pricing).
A pricing method where the selling price is determined by adding a fixed percentage or amount of profit to the actual cost of production.
Cost-plus is usually business, commerce, government contracting, technical in register.
Cost-plus: in British English it is pronounced /ˌkɒst ˈplʌs/, and in American English it is pronounced /ˌkɔːst ˈplʌs/. Tap the audio buttons above to hear it.
Phrases
Idioms & Phrases
- “It's a cost-plus world (informal, rare)”
Learning
Memory Aids
Mnemonic
Think of a restaurant bill (COST) where you automatically add a service charge PLUS. In 'cost-plus', the 'plus' is the guaranteed profit added to the bill.
Conceptual Metaphor
PROFIT IS AN ADD-ON (like a service charge or a tip added to a base amount).
Practice
Quiz
Which of the following is a key characteristic of a 'cost-plus' arrangement?