- Trending Categories
Data Structure
Networking
RDBMS
Operating System
Java
MS Excel
iOS
HTML
CSS
Android
Python
C Programming
C++
C#
MongoDB
MySQL
Javascript
PHP
Physics
Chemistry
Biology
Mathematics
English
Economics
Psychology
Social Studies
Fashion Studies
Legal Studies
- Selected Reading
- UPSC IAS Exams Notes
- Developer's Best Practices
- Questions and Answers
- Effective Resume Writing
- HR Interview Questions
- Computer Glossary
- Who is Who
Differentiate between price, value and cost
Before going for difference, let us understand the meaning of price, value and cost in simple words
Price is what you pay
Cost is what you expend
Value is what you get
There is confusion between words price, cost and value. Many people think all the threewords are more or less same but there is some difference between them. Before going for differences lets we try to understand the overview of these three words
Price
In commercial terms, price is the amount charged by the seller from the buyer in exchange for any product/service. Price includes both cost and profit. When commercial transaction is good then it is called price, when subject matter is service, then it can be
- Supply of professional service then it is called FEES.
- In case of insurance then it is called PREMIUM.
- Used in case of place/machinery then it is called RENT.
- In case of transportation then it is called FARE.
- For work done (organization) then it is called SALARY.
Sometimes price generates revenue and sometimes price adds to cost of production. Price is also considered as the amount given in return of goods or service acquired by the buyer.
Cost
Cost is the amount spent on inputs with the aim of producing product/supplying services. Inputs can be land, capital, material, capital etc. in other words or simply words, cost in the financial worth of sacrifice made to get goods/services. Benefits obtained can be present or in future. Elements of costs are material, overheads and labor. Costs are divided into
Fixed cost − remains same irrespective of units produced (rent insurance, deprecation etc.)
Variable cost − not same or varies with units produced (labor, raw material etc.)
Value
It is a benefit derived from product/service by customers. Value is decided on the basis of benefits received in terms of features, specifications, etc. in the marketplace. Features include functional characteristics, technical support, customer support etc.
Characteristics
- Nature is immeasurable.
- Value Varies from time to time.
- Value depends on supply of product and demand.
- Value differs from place to place.
Differences
The major differences between price, value and cost are as follows −
Price | Value | Cost |
---|---|---|
Amount paid for product/service. | Amount spent on producing/maintaining a product. | Utility of a good/service. |
Ascertained from the consumer's view. | Ascertained from the producer's view. | Ascertained from the user's view. |
Estimated through policy. | Estimated through fact. | Estimated through opinion. |
Increase/decrease in product price depends on market variations. | Rise/fall of cost depends on market variations. | Value remains constant. |
It is calculated in terms of money. | It is calculated in terms of monetary terms. | It is calculated in terms of money. |
- Related Articles
- Differentiate between direct cost and indirect cost.
- Differentiate between cost accounting and financial accounting.
- Differentiate between fair value and market value
- If cost price = Rs 400 and selling price = Rs 500, profit% =
- If cost price = Rs 600 and loss = 60, then selling price =
- PMP Certification Cost and Price Breakup Explained
- If Selling price $=$ S.P, Discount % $=$ D, find cost price.
- Find cost price from given selling price and profit or loss percentage in C++
- Differentiate between discounted Net present value and Internal rate of return.
- Find Selling Price from given Profit Percentage and Cost in C++
- Distinguish between period cost and product cost.
- Differentiate between turnover and profit.
- Differentiate between ADR AND GDR.
- Differentiate between invoice and bill.
- Differentiate between investing and trading.
