15-Jan-2022:
Cost, Price & Value: Explained in short in the Marketing parlance
Cost:
- The dictionary meanings are: the price paid to acquire, produce, accomplish, or maintain anything; an outlay or expenditure of money, time, labor, trouble, etc.
- Cost means a price that must be paid for something or a sacrifice.
- Cost most often refers to a specific amount of money that a seller wants for the item they are selling. However, cost is also used more generally to mean whatever the price of an item is.
- But in today’s world of Marketing, Cost is an objective term which generally refers to all types of expenses incurred to produce, procure, create or manufacture an item.
- Cost is of Objective nature. It remains constant under unchanged circumstances.
Price:
- The sum or amount of money or its equivalent for which anything is bought, sold, or offered for sale.
- Price is used mainly of single, concrete objects offered for sale; charge, of services:
- But in today’s world of Marketing, Price is an objective term which generally refers to Cost plus a margin amount which is called profit, which rewards the maker / producer / procurer / creator / manufacturer.
- Sometimes the Price may be less than the Cost under certain undesirable constraints.
- Price is of Objective nature. It may change on various different reasons for the same cost.
Value:
- Intrinsic worth, merit, or importance of an object;
- Monetary or material worth, as in commerce or trade.
- Value, worth imply intrinsic excellence or desirability.
- Value is that quality of anything which renders it desirable or useful:
- Value is of Subjective nature. It doesn’t change on its own.
- Sometimes the Value of an Object can be changed which is called the “Value Addition”, by undergoing certain processes.
- Value is sometimes divided into two types:
- Objective, Physical, Utility; which remains constant.
- Subjective, Emotional, Esteem; which varies from person to person, time to time, etc.
