Success in the Cost Game depends on how well a company can manage costs and create efficiencies, because their leeway to price based on value is limited. They use cost‐plus pricing to set prices because their offerings are standardized or commoditized, competition is intense, and buyers hold considerable leverage.

But Cost Game players can still grow their business, gain market share, and boost profitability. Your path to growth in the Cost Game depends on:

• Understanding costs in great detail: Use experience, scale, and complexity curves to understand your current and expected fixed and variable costs.
• Optimizing how you set the “plus”: Your pricing basis should align with your cost drivers and create a range of margins based on customer and market characteristics.
• Influencing customer behavior to save costs: Fees and functional discounts help nudge customers to minimize costs, creating savings you can share with them.

Cost-plus pricing is less useful as a pricing approach when the conditions of the Cost Game do not apply.