In today seem ancient Soviet times, the formation of prices was fairly easy, requiring only the economists from the basic knowledge of mathematics.In the absence of competitive price index has not played the role it plays today.If previously the price was treated as a more or less objective indicator value of the goods, today the price - it's a tool against competitors.Due to the fact that competition means a lot for the company, and the appointment of prices is now almost not controlled by any rules of the "top", and there are so many different methods of determining the price, including the cost plus method of pricing is considered to be the easiest.
That simplicity is considered the main advantage of the cost method.The price in this case is determined by adding up all the costs associated with production, and that the rate of profit, which the company wants to receive.The rate of return, at the same time is determined either by eye or with the requirements of shareholders of the company, or on the basis of the situation on the financial market.Anyway, the cost plus method of pricing does not require in-depth analysis and complex management decisions.
Besides simplicity of the method, one can not ignore its greatest honesty and objectivity.In this case, the price the consumer pays for the product, is easily explained by the objective need to recoup production costs, and profit is a prerequisite for stimulating entrepreneurial activity.In turn, the market pricing mechanism, not taking into account such factors as justice may lead to prices, including 100-300% -s' extra charge.
Today, however, honesty is not considered the price leaders.But they may be interested in what the cost method of pricing does not depend on chance.Whatever happens in the market, the company remains true to its price.Instead of rushing from side to side, which can end in disaster when a number of errors, the company chooses if not always the most efficient, but a stable and reliable way.Such an approach is especially important for large companies with their own clientele reliable and not dependent on market volatility.
Describing the advantages of this method, it is necessary to mention about its drawbacks.The main disadvantage - it records only a small number of factors.Once the desired rate of return is included in the price of the variable components, whereas the same pricing econometric methods have focused on a number of independent factors that allow the best decision.Using the cost method, you expose the company sufficiently serious risk "does not fall into the price."That is, to put such a price, which will look in comparison with the prices of competitors, is simply absurd.It is especially dangerous if the price is higher than the average market price - sales may fall rapidly.
Another risk associated with the response of competitors.Cost pricing method, the company does too "readable" for them.While your actions are predictable, competitors will not be difficult to develop such a method of struggle that will easily squeeze out of the market.You will not be able to flexibly respond to their actions, because it will have to revise all of the pricing policy.
Nevertheless, a number of companies continue to successfully use the cost method of pricing.And even if you find it a relic of the past, at least, we must calculate the approximate price of using this method.After all, it allows you to take into account the costs and profits in the full amount, which is the most important for the company throughout the production process.
