Price is an expression of the value of a good in money, or the amount of money for which the seller is willing to sell, and the buyer can buy a unit of a particular good. The formation of the final price of a product is influenced by the cost of production costs, the value of the product, supply and demand in the market, competition and government regulation.
Instructions
Step 1
The pricing principles are based on two aspects. First, the price is determined based on the costs incurred by the enterprise to manufacture the goods. Each commodity producer strives to get the greatest profit by putting it in the price of the product. At the same time, there is an orientation towards consumer demand for this product. In this way, the price is formed through bidding, when the seller and the buyer agree on a profitable one for both. Secondly, prices are formed taking into account the competition in the market for similar goods. At the same time, sellers at the head of pricing put not their own costs or the demand of buyers, but the average price level in the industry or the price of a leading product. Therefore, it is important to take into account all the nuances, both depending on the manufacturer, and spontaneously imposed by the market, when forming the price of a product.
Step 2
There are different types of prices, which means that their calculation is also different. The retail price closest to us, the end consumers. This is the price at which retail goods are sold in small quantities for personal consumption. Retail prices are formed freely, influenced by supply and demand in the market. The retail price is always based on the wholesale price - this is the price at which retailers purchase goods from manufacturers. A trade markup is made on the wholesale price, which includes distribution costs (salaries of store personnel, transportation costs, costs of packing and packaging goods, etc.), as well as the seller's profit. The retail margin is set independently by retailers.
Step 3
In addition to retail and wholesale prices, there is also a selling price. It will coincide with the wholesale, if excise tax is not included in the cost of the goods. If the number of intermediaries in the process of selling manufactured goods from the manufacturer to the final consumer is large, then the price rises and its structure becomes more complex.
