What is the difference between price and cost?

Answer 1

From a Seller's perspective: Price is what you sell something for, cost is what you paid for it or what it cost to produce it. The difference is referred to as margin or gross profit.

From a Buyer's perspective: Price is what you initially pay for an item. Cost is what it takes to maintain the item until it reaches Mean Time Between Failure (MTBF) also referred to as Life Expectancy (see UL rating to get MTBF). Example: Company Apurchases a surveillance system (whose DVR and Cameras have an MTBF rating of 6 years) for a price of $50,000.00. Company B purchases a surveillance system (whose DVR and Cameras have an MTBF rating of 18 years) for a price of $75,000.00. Based on the MTBF ratings Company A will have to purchase their surveillance system three times for an actual cost of $150,000.00 over the 18 years. Then you factor the time value of money on your savings for your final evaluation on Price versus Cost. Assuming a 6% interest rate over 18 years you would have a total of $75,000.00. Company A's Cost is $25,000 more (not counting the company labor to coordinate the system change) So it is important to evaluate MTBF in order to make the most economical purchase.

Answer 2

The word costing refers the cost incurred to manufacture the product and pricing is cost of selling the same product in the market example : if we manufacture a toy which costs 200/- and the same toy we are going to sell in the market is 500/-.this is called pricing

Answer 3

Price is the amount of money you pay to buy the equipment. Cost is the amount of money you pay to operate the equipment over the lifetime.