Is cost-plus better than the retail method?

It is more transparent, not more profitable. Cost-plus wins the trust of clients who want to see the maths and suits projects with large, well-defined purchasing. The retail method protects the discount you negotiated and is simpler to present. What matters is that the contract names one of them unambiguously.

What percentage is normal on cost-plus?

We do not publish a figure we cannot source. Use the fee calculator with your own hours and your own goods budget: it shows what a given percentage yields as an effective hourly rate, which is the only benchmark that describes your business rather than someone else's.

DefinitionUpdated July 31, 20262 min read

Cost-plus pricing: what the client sees and what you keep

Cost-plus means the client pays your documented net cost plus an agreed percentage. How it differs from the retail method, what has to be disclosed, and where it exposes the designer's revenue to the client's spending.

By Idan Mann, founder of NYA

The short answer

Under cost-plus, the client pays your net cost for goods plus an agreed percentage on top, and your invoices show both figures. It is the transparent alternative to the retail method, where you quote a single price and keep the difference. Cost-plus ties your revenue to what the client spends, not to what you do.

Cost-plus is a disclosure choice before it is a pricing choice. You are agreeing to show the client your net cost — the number your trade account earns you — and to add a stated percentage in the open. Clients who have been burned by opaque billing like it a great deal, and it makes the invoice self-explaining.

Cost-plus against the alternatives

Model	What the client sees	Where your revenue comes from
Cost-plus	Net cost, plus a stated %	The percentage, on whatever they spend
Retail method	One price per item	The gap between net and the price you quoted
Hourly	An hourly rate and hours	Time; goods usually pass through at cost
Flat fee	A single fee for a defined scope	The fee; scope creep eats it
Percentage of project	A % of total project cost	The overall budget, build included

Most firms combine two of these — a design fee for the work plus a markup on goods is the common hedge. Our fee calculator bills the same project every way at once.

What cost-plus demands of your paperwork

Vendor invoices you are willing to show. "Cost" has to mean something specific and consistent — the markup calculator makes the choice explicit by letting you mark freight up or pass it through.
A written definition of what the percentage applies to. Goods only, or goods plus freight, plus receiving, plus installation?
Discipline about discounts. If you negotiate a better net mid-project, the client sees the improvement — under the retail method you would have kept it.

Cost-plus makes your income a function of the client's budget. On a project that shrinks, your revenue shrinks with it even though the specification work is already done — which is why it is usually paired with a design fee that does not.

Common questions

Is cost-plus better than the retail method?: It is more transparent, not more profitable. Cost-plus wins the trust of clients who want to see the maths and suits projects with large, well-defined purchasing. The retail method protects the discount you negotiated and is simpler to present. What matters is that the contract names one of them unambiguously.
What percentage is normal on cost-plus?: We do not publish a figure we cannot source. Use the fee calculator with your own hours and your own goods budget: it shows what a given percentage yields as an effective hourly rate, which is the only benchmark that describes your business rather than someone else's.

Keep reading

Cost-plus pricing: what the client sees and what you keep

By Idan Mann, founder of NYA

The short answer

Cost-plus against the alternatives

Model	What the client sees	Where your revenue comes from
Cost-plus	Net cost, plus a stated %	The percentage, on whatever they spend
Retail method	One price per item	The gap between net and the price you quoted
Hourly	An hourly rate and hours	Time; goods usually pass through at cost
Flat fee	A single fee for a defined scope	The fee; scope creep eats it
Percentage of project	A % of total project cost	The overall budget, build included

Most firms combine two of these — a design fee for the work plus a markup on goods is the common hedge. Our fee calculator bills the same project every way at once.

What cost-plus demands of your paperwork

Vendor invoices you are willing to show. "Cost" has to mean something specific and consistent — the markup calculator makes the choice explicit by letting you mark freight up or pass it through.

A written definition of what the percentage applies to. Goods only, or goods plus freight, plus receiving, plus installation?

Discipline about discounts. If you negotiate a better net mid-project, the client sees the improvement — under the retail method you would have kept it.

Common questions

Is cost-plus better than the retail method?: It is more transparent, not more profitable. Cost-plus wins the trust of clients who want to see the maths and suits projects with large, well-defined purchasing. The retail method protects the discount you negotiated and is simpler to present. What matters is that the contract names one of them unambiguously.
What percentage is normal on cost-plus?: We do not publish a figure we cannot source. Use the fee calculator with your own hours and your own goods budget: it shows what a given percentage yields as an effective hourly rate, which is the only benchmark that describes your business rather than someone else's.