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An empirical investigation of the importance of cost-plus pricing

Guilding, Chris, Drury, Colin and Tayles, Mike (2005) An empirical investigation of the importance of cost-plus pricing. Managerial Auditing Journal, 20 (2). pp. 125-137. ISSN 0268-6902

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Purpose – This paper has two specific objectives: to appraise the relative importance of cost-plus
pricing and to develop and test hypotheses concerned with contingent factors that might affect the
degree of importance attached to cost-plus pricing.
Design/methodology/approach – Data were collected via a mailed survey of UK and Australian
companies. Tests were applied and non-response bias was not a threat to the validity of the findings.
Findings – A relatively high degree of importance attached to cost-plus pricing is noted, although
there appears to be a substantial number of companies that use cost-plus pricing for a relatively small
sub-set of products and services. Companies confronted by high competition intensity attach relatively
high degrees of importance to cost-plus pricing and manufacturing companies attach a relatively low
degree of importance to cost-plus pricing.
Originality/value – The paper makes a contribution, given that only two empirical studies with a
specific focus on cost-plus pricing were revealed in a literature search covering the last two decades.
Additionally, little has been done to investigate the contingent factors affecting the application of
cost-plus pricing. The significant role played by competition intensity in connection with accounting
system design is observed to be one of the more enduring relationships uncovered by management
accounting research. But a somewhat perplexing aspect of this study concerns the failure to find a
statistically significant positive relationship between company size and cost-plus pricing.

Item Type: Article
Additional Information: © Emerald Group Publishing Limited
Uncontrolled Keywords: Cost-plus pricing, Costs, Competitive strategy, Manufacturing systems
Subjects: H Social Sciences > HF Commerce
H Social Sciences > H Social Sciences (General)
H Social Sciences > HF Commerce > HF5601 Accounting
Schools: Huddersfield Business School
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Depositing User: Sara Taylor
Date Deposited: 30 Jul 2007
Last Modified: 28 Aug 2021 23:32


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