This article will highlight Relation between CP, SP, MP along with significance and differences. The current article is trying to emphasize the difference and relationship that can exist between Cost Price, Selling Price, and Market Price.
What is Cost Price?
The cost price is the money that a company has spent to make a particular product or service. This price is also known as the “cost of goods sold”. The cost of goods sold is important because it helps in calculating the gross profit from a particular product or service. In short, the cost price is determined by what the production costs are and then added to the selling price to form the final selling price for the goods and services.
What is the Selling Price?
The selling price of goods, products, commodities, and services refers to an amount that buyers are willing to pay for a certain item. The selling price indicates what customers are willing to pay for an item or service at shops and restaurants. In other words, selling price is the price at which a seller will buy goods from the seller.
What is Market Price?
The market price in economics refers to the final selling price at which a good or service can be sold from producer to consumer. Market prices are used in determining the economic value of goods and services. Market prices play an important role in determining the profitability and profitability of industries as well as for controlling inflation and deflation. In short, market prices are determined by supply and demand factors and are based on the buyer’s demand.
Relationship Between Cost Price and Selling Price:
Cost price and selling price are linked together with each other. The cost price is the money that a business spends to produce a product or service while the selling price refers to an amount that the customer pays for the product. The cost price is included in the selling price and it helps in calculating the profitability of the business. Hence, Cost Price and Selling Price have a direct relationship with each other.
Relationship Between Cost Price, Selling Prices, And Market Prices:
1) Market price is the price at which a good or service can be sold from producer to consumer.
2) Cost Price is the price that is determined by what production costs are and then added to selling prices to form the final selling prices for products and services.
3) Selling Price and Market Price refer to an amount that buyers are willing to pay for a certain item.
4) Cost Price, Selling Price, Market Prices are linked together with each other. The cost price is the money that a business spends to produce a product or service while the selling price refers to an amount that the customer pays for the product. The cost price is included in market and it helps in calculating the profitability of a business. Hence, Cost Price, Selling Price, and Market Prices have a direct relationship with each other.
Difference Between Cost Price, Selling Price, and Market Prices:
1) Market price is the price at which a good or service can be sold from producer to consumer.
2) Selling Price is the price at which a seller will buy goods from the seller.
3) Cost Price is determined by what production costs are and then added to selling prices to form the final selling prices for products and services.
4) Achieved or achieving a rate of return on investment(ROI) is another important factor that has a direct relation with Cost Price, Selling Price and Market Prices. For example, if a business is having higher profit percentage then it will have more profit with less risk. In simple terms, higher Sales Volume = Lower Profit Margin = Higher Market Price
5) Profit Margin refers to the final price of a good or service after subtracting the cost price from market prices.
6) At this stage, difference between market price and cost price is also considered as a primary element.
Conclusion:
In conclusion, Cost Price, Selling Price and Market Price are different from each other. The cost price is the money that a business spends to produce a product or service while the selling price refers to an amount that the customer pays for the product. The important thing to remember here is that the difference between Cost Price, Selling Price, and Market Prices has direct relation with each other. In short, profit margin, profit percentage, and ROI have direct relation with Cost Price, Selling Prices, and Market Prices which in turn can be deduced from different aspects such as markets where more competition is present then they tend to have lower selling prices. And on the opposite side of the scenario when there are fewer competitors then they will have higher selling prices due to higher competition. The cost price is included in the selling price and it helps in calculating the profitability of the business. Hence, Cost Price and Selling Price have direct relationship with each other.
