Lesson Plan

• Describe the different types of costs (fixed, variable, semi‑variable) and their behavior.
• Explain how cost information informs various pricing methods such as cost‑plus, target profit, break‑even, and contribution margin pricing.
• Apply break‑even analysis to determine minimum selling price and required sales volume for a given profit target.
• Evaluate the limitations of cost‑based pricing and how market factors can be integrated with cost data.

• Projector and screen
• Whiteboard and markers
• Printed handout on cost types
• Worksheet with pricing calculations
• Calculators or Excel spreadsheet template
• Case‑study packet on product pricing

Begin with a quick poll asking students how they would set a price for a product they design. Connect this to prior learning about revenue and profit. Explain that today they will discover how cost data underpins pricing decisions and will be able to calculate viable selling prices.

1. Do‑Now (5') – Short quiz on fixed vs. variable costs.
2. Mini‑lecture (10') – Review cost types and introduce cost‑plus and break‑even concepts with projector examples.
3. Guided practice (15') – Pairs calculate unit cost, break‑even quantity, and a cost‑plus price using the case study and calculators/Excel.
4. Whole‑class debrief (10') – Groups share results, discuss differences between pricing methods and their limitations.
5. Market integration activity (10') – Examine competitor price list and adjust the calculated price to reflect market positioning.
6. Check for understanding (5') – Exit ticket: write one advantage and one drawback of cost‑based pricing.

Recap that cost analysis provides a floor for pricing while market considerations set the ceiling. Collect exit tickets and assign the homework worksheet that applies break‑even analysis to a new product. Preview the next lesson on value‑based pricing.