The cost-plus pricing strategy

In an ideal world we would all use cost-plus to set our prices. With this method you simply set prices to cover your fixed and variable costs, and leave enough room for profits. 

Unfortunately, most customers don't care about your costs (the US Government excluded), and would rather get a lower price than see you make a lot of profit. Although you cannot realistically use cost-plus to set prices, you want to make sure that the aggregate prices you charge cover costs and provide for a profit.