Than the price differs from the value? The formation of prices. Market value and market price

Any service or products have their price and value. While in use, many people confuse the two terms, using them interchangeably. Indeed, the two concepts are inextricably linked. So what price differs from the value?

Meaning of the term "value"?

This concept is more similar to the term cost. In fact, it is the equivalent of expenditures on the creation of goods or services, including:

• Cash;
• Time;
• Intelligent;
• Production and other.

Simply put, any cost that, as a rule, are initially measured in physical units, and then are equal to cash equivalents.

There is also the concept of consumer value. This figure reflects the individual needs of a specific consumer to a specific service or product. Consumer value does not always coincide with the monetary equivalent of the costs incurred by the manufacturer or contractor.

It is important to know that the cost – option that is permanent only for a short period of time. For example, last year the computers were cheaper on 2 thousand roubles, and it is connected not only with inflation but also with the fact that the motherboard went up, raised the minimum wage and so on.

The Concept of "price"

To understand how price differs from value, it is necessary to know the definition of each term. Price – actual quantity of cash that the buyer is willing to pay for the purchase of specific products or services. In addition to the cost, the price takes into account the margin of the buyer. The markup by the seller is determined individually and depends on many factors:

• Fashion for the products;
• Seasonal demand;
• Bulk purchase;
• Falling demand, and others.

So the margin is always different, for example, coats – this is a seasonal product, in the warm season the demand falls, the price accordingly also, or margin of the seller.

Prices

There are several classifications, in terms of turnover are: the wholesale and retail prices. As the name implies, the retail price intended for “small” customers, that is, purchasing goods in limited quantities, one or more units. Wholesale prices designed for buyers who purchase products in large quantity. This price may be the price of the manufacturer.

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Depending on the type of control over the price level there are:

• Adjustable at the level of legislation. In this case, the government can set the threshold or recommend to sellers a specific price, and also set the limit, which is calculated based on the size of the minimum wage or cost of a particular product;
• Unregulated by public authorities.

There is Also such a thing as a “floating” or “moving” prices. Most often, such prices are used in long-term cooperation, for example, a contract for the supply of certain products for a period of 3 years. Naturally, during this period the price will change. Therefore, in such situations, the set is not “solid” position. In this case, the formation of prices for the goods shall be made at the time of delivery and not at the time of conclusion of the contract.

In the formation of retail prices can be published and the estimated price. First – those that are recorded in the catalog or price list. And design – those that are selling, and they may differ from catalogue.

There is such a thing as seasonal price, it is most often used in the agricultural sector. The price in the summer has a tendency to decline.

The Price of imported goods often exists in two forms:

• Net price, i.e. the actual settlement between seller and buyer;
• Price-the gross, including insurance, transportation and Franco.

Classification of a value

Understanding how price differs from value, you should know that the change in the value necessarily involves the allocation of expenses.

Cost:

There is Also the concept of investment and the special value.

Methods of the calculation of the cash equivalent of a product

To fully understand how price differs from value, it should be understood that these two quantities are formed in completely different ways.

First of all, the cost depends entirely on the conditions of production and their changes, namely:

• As far as increased or decreased productivity;
• How increased or decreased amounts of consumables required for the production of a particular product;
• Changing the payment.

It Becomes immediately clear that the development of scientific and technological progress directly affects the cost of any product. If the production process is simplified and its cost reduced.

The Price includes the cost of the premium, the amount of which depends on the wishes of the seller and other factors, for example, the level of competition in a particular market segment. To date, there are two pricing methods:

• Full cost;
• Direct costs.

Basic methods of determining the cost

There are three methods of calculation of cost:

Basic methods of determining the market price

In Addition to what the entrepreneur wants to make a profit, it still needs to justify a set price to have the fiscal authorities had no claims. This method of determining the market price are called price definition for tax purposes. The tax code clearly defines a situation when the tax authorities can intervene in the pricing process.

The easiest way in this case – the search for identical products. If in a particular industry issued a lot of deals with identical goods or services then forming the price based on the data from official sources. It can be stock quotes or data from state statistical bodies.

Unique goods are much more difficult to assess, especially if it is done for tax purposes. For example, the owner brought the goods, which has no analogues in the domestic market, it is clear that the price will be formed from the amount of the contract and delivery cost, and what to do with profit, how to evaluate it, it does not fall under the attention of the taxmen? In this case, you can use the following formula:

C2 - (32 + P2) = C1,

C2 – is the resale price to the next buyers;

Z2 – all costs incurred by the seller in the product promotion (marketing and promotion);

P2 – the income of the purchaser at resale.

If you cannot use the technique with the subsequent implementation, it is possible to resort to standard cost method. The formula in this case looks as follows:

C (costs) + P (profit to seller) = TS (market price).

Cost and value

Price, value and cost – 3 inseparable concepts, but not identical.

The Cost – all costs incurred by the manufacturer during production, per unit of product. This:

• Materials;
• Salary;
• Electrical energy;
• Overhead and other.

The Value in turn includes the cost of a certain percentage of profitability, which is put to profit. The profitability is usually laid taxes which will be paid. In fact, these two concepts occur out of each other, in other words, on the basis of the cost is the cost.

The Cost is the characteristic of the products of the first level and the second value (as calculated value) must include the amount of expenses taken into account when determining cost.

Summary

Generalizing the above, we can confidently say that the market value and market price have manycommon. And the cost – this is just component of the price and displays the actual costs. Price – this not only costs, but also profit of the seller.