cost-plus
UK[ˈkɒst plʌs]US[ˈkɔːst plʌs]
adj
relating to or being a contract in which the seller is paid for the costs of production plus an agreed percentage as profit.
n
a cost-plus contract or arrangement.
Morpheme Breakdown
cost
plus
cost
expense
plus
additional amount
Etymology
The term "cost-plus" is a modern commercial compound, formed transparently from two common English words of Latin origin. "Cost" traces back to the Latin verb 'constare', meaning 'to stand together' or 'to stand at (a price)', which evolved through Old French to signify the price or expenditure required for something. "Plus" entered English directly from Latin, retaining its core meaning of 'more' or 'additional'. The compound's logic is purely arithmetic and contractual: it literally denotes the foundational costs with an added, agreed-upon amount (the "plus"), creating a pricing model designed to guarantee a profit margin for the supplier by shifting the risk of cost overruns to the purchaser. This straightforward combination reflects a 20th-century business practice, particularly associated with government and large-scale industrial contracts.
Analysis
Structure: cost (expense) + plus (additional amount)
- cost: From Middle English 'cost', from Old French 'cost', from Latin 'constare' ('to stand at, to cost'). In this compound, it functions as the primary noun denoting the expense or outlay.
- plus: From Latin 'plus' ('more'). In this compound, it functions as a preposition/adverb indicating an addition or surplus.
Examples
The defense department awarded a cost-plus contract for the new aircraft system.
Under a cost-plus agreement, the contractor is reimbursed for all expenses and receives a fixed fee.
They argued that the cost-plus pricing model removed the incentive for efficiency.