In the system of market relations, the problem of pricing occupies a key place. Organizations generally announce free (market) prices, the size of which is determined by supply and demand.
Instructions
Step 1
The fairest way to determine the selling price of goods is to obtain the minimum required level of return on assets for the organization. It cannot be lower than the price of capital. It also determines the total amount of profit that allows you to ensure the receipt of such profitability.
Step 2
The cost method of pricing is that the price is formed on the basis of the seller's costs for the production and sale of goods. That is, the selling price of a product consists of the ratio of the amount of the indirect tax; the total costs of the seller for the production and sale of goods; the rate of profit inherent in the selling price of the goods to the volume of the batch of goods or the volume of production.
Step 3
This method helps to accurately take into account the costs of the firm in pricing and takes into account the interests of the seller. However, it should be noted that in practice, the full actual cost of production is added up after the fact of sale, when it comes to wholesale trade. Therefore, the real information about the price, taking into account all the costs of the company, comes a little later.
Step 4
The cost method of pricing is subdivided into active and passive pricing. The latter presupposes setting prices only taking into account the costs of the firm and competitors. That is, trading is conducted with the aim of obtaining funds to reimburse the costs incurred. As part of the cost approach, active pricing involves various ways of managing indicators of price, marginal income, sales volume, turnover by correlating the values of variable and fixed costs of the company.
Step 5
When choosing active or passive pricing, you should pay attention to the favorable market situation or its decline. The cost method of pricing is suitable for small firms operating in a monopolistic competitive environment. Large firms need to analyze the market, take into account fluctuations in demand for goods, and take into account costs.
