Price and cost: What is the difference?

We analyze the difference between the concepts of price and cost: definitions and visual examples.

The Russian language is very rich, but despite this in schools, we teach it very superficially, and often we don’t even understand that the words equivalent at first glance have completely different meanings. In this article, we will consider the words price and cost, what is the difference between them and why they were mistakenly perceived as equivalent.

Price and cost: What is the difference?

Price - This is the amount of banknotes set for the position of the goods for which the seller is ready to sell the goods. Also, the price is directly tied to the equivalent by the number of goods - pieces, kg, grams, etc.

Price - This is the total amount spent on the purchase of raw materials and the manufacture of a particular product (binding to quantity or weight is different with price: pcs., Kg, etc.). With regard to services - the cost is the number of hours multiplied by payment per hour to the employee to the providing service, as well as if there are expenditure materials plus their price (it is the price important, and not the cost, since the person providing services previously bought this material, and did not produce this material ).

Now we will consider on the example of the price and cost what is the difference in the product and service.

So, on the shelf of the store, with the name, for example, the “Cuplah” is worth a pack of sugar, let's say the name of the manufacturer “Slavik” with a price of 59 rubles, but in the supermarket through the road, let's say “cheaper” Slavik sugar is sold in price 30 rubles. Why did such a difference arise?

Knowing the cost of the goods, you can put an interesting price for yourself and the buyer

The manufacturer “Slavik” bought raw materials (sugar beets), brought to the plant at which cars and people worked, and made sugar, he also fed it into packs of 1 kg and calculated “Cost!” goods of 18 rubles. I added 2 rubles to its cost (to sell sugar to wholesale), and as a result, the manufacturer’s price of 20 rubles was obtained.

Total:

Sugar cost 18 rubles;
The price of the manufacturer 20 rubles (wholesale price).

In the fact of buying sugar, the owners of supermarkets set their own, retail margin of 10 rubles (“cheaper cheap”) and 39 rubles (“Slavik”). Thus, sugar hit the counter with retail prices 30 and 59 rubles, respectively.

For example, it is also worth indicating that in the seasons of discounts, the discount itself is formed in this range: from cost to price. On the example of sugar, this will look like this: the maximum discount can be up to 18 rubles, especially in cases where the goods are stuck in a wholesale warehouse and the manufacturer also makes a discount so as not to remain in loss.

Discounts on gadgets, equipment and branded clothes are especially pronounced. Since the cost of such goods usually does not exceed 10-15% of the price.

The basis of trade - profit on the difference in price and cost

Now consider the difference between the price and cost by the example of the service. Now the beauty industry is developing rapidly and has come into fashion unjustly (according to the master) the forgotten way of hair removal is Shugaring. And, of course, they give hundreds of arguments, but if you look from the point of view of the economy, then we see an obvious picture.

The price of wax hair removal in the cabin is 1100 rubles.
The price of a shugaring of the same zone is 1200 rubles (new, fashionable, and the difference is a little more - of course I will go! So many think).
Now we will analyze in more detail:
The price of "consumables" for wax is 300 rubles.
The price of "consumables" for shugaring is 70 rubles.
The time spent in both cases is the same, which means that the master receives the same payment in both cases.

The cost of wax depilation 300-70 \u003d 230 rubles more expensive than shugaring, and price The shugaring is more than 100 rubles. Total for such a service, the difference between the cost and price of both types of services is 230+100 \u003d 330 rubles, which means that the master earns more than 330 rubles in shugaring and advertising becomes predictable.

We are not trying to figure out in this article what is better/worse, only give an affordable example for assessing words price and cost.

We examined the concept of price and value, what is the difference, and dismantled the meaning of the word, for a better understanding. Now you can not only properly operate with words, but also more consciously approach purchases, purchases of services, and this is definitely saving the family budget!