Chapter 10 Pricing Policies and Methods All commercial and non-profit organizations are faced with the task of setting prices for their goods or services. A single price for all buyers is a relatively new idea. It only became widespread with

Question 24 Methods for collecting marketing information Answer Marketing information can be obtained during one of three types of research (Fig. 24): desk research; field; combined. The goals of desk research are the collection and processing

Question 25 Methods for obtaining primary information. Observation Answer Observation is the passive registration by the researcher personally or by technical devices of certain processes or actions of people. The main conditions for conducting observation are: recording

Question 26 Methods for obtaining primary information. Experiment Answer An experiment is a research method used to assess cause-and-effect relationships, implying the active intervention of researchers in certain processes: they change one parameter or

Question 27 Methods for obtaining primary information. Poll Answer Poll – finding out the subjective opinions and preferences of respondents (persons surveyed) in relation to any object. The surveys are very diverse. The classification of surveys is given in Table. 21.Table 21

Question 10 What are management methods? Answer Management methods are rules and procedures, following and implementing which allows the manager to achieve the main goal of management: ensuring the harmonious development of the managed object. This means that everything

Question 145 What are structural methods of conflict resolution? Answer There are four of these methods.1. Clarification of job requirements. The better employees understand their task and the result that needs to be obtained, the less likelihood of conflict.2. Coordination and

Pricing methods The pricing method is determined based on an analysis of the state of demand, production and sales costs, and the level of competition. There are several pricing methods: cost-based, target profit-oriented,

Pricing issues The importance of the issue of “correct” pricing does not require explanation or evidence. Let's limit ourselves to indicating the main goals of pricing.? Achieving maximum store attractiveness at prices for target customers.? Security

After determining and analyzing the demand function, cost structure and competitor prices, it is time to make a pricing decision. To do this, it is necessary to choose a pricing method that would take into account the above limitations to the maximum extent. There are three groups of pricing methods:

pricing based on own costs;

demand-oriented pricing;

competition-oriented pricing.

Having chosen and applied one of the pricing methods, it is necessary to make a pricing decision, i.e. set a specific price. Here it is necessary to take into account such aspects as psychological impact, the influence of other elements of the marketing mix, check compliance with the original goals of the pricing policy, and also identify various e types of reactions to the accepted price.

Pricing Methods

Costly methods.

There are several cost-based methods that determine the price based on the “cost plus profit” principle.

1. Cost method taking into account the full (or average) costs of production, it is based on determining the full cost, which includes both variable and fixed costs. The essence of the method is to sum up total costs: variable (or direct) plus fixed (or overhead), and the profit that the company expects to receive.

The main advantage of this method is its simplicity and convenience. This is due to the fact that the manufacturer always has data on its own costs. However, it has two big drawbacks:

1) when setting prices, the existing demand for the product and competition in the market are not taken into account, so a situation is possible when the product at a given price will not be in demand;

2) any method of attributing fixed overhead costs to the cost price of a product, which are the costs of managing an enterprise, and not the costs of producing a given product, is conditional.

2. Direct (or marginal) cost method is based on setting prices by adding a certain premium - profit - to variable costs. At the same time, fixed costs as expenses of the enterprise as a whole are not distributed among individual goods, but are repaid from the difference between the sum of sales prices and the variable costs of production. This difference is called “added” or “marginal” profit. With the right approach, variable (direct) costs should be the limit below which no manufacturer will price their products. In any case, the true function of cost is to set a lower limit to the initial price of a good, while the value of that good to the consumer determines the upper limit to its price.

Selling a product at a price calculated using this method is effective at the saturation stage, when there is no sales growth and the company wants to maintain sales volume at a certain level.

3. The method of calculating prices based on break-even analysis and ensuring target profit is based on the fact that the enterprise seeks to set the price for its product at a level that would ensure the desired amount of profit. The break-even point is the intersection point of the total revenue curve and the total cost curve. At the break-even point, the profit volume is zero. The main disadvantage of the method of determining price based on break-even analysis is that the relationship between the price of the product and actual demand is not taken into account.

4. Method of setting price based on return on investment analysis. The main objective of this method is to estimate the total costs of various production programs and determine the volume of output, the sale of which at a certain price will recoup the corresponding capital investments. The established premium to production costs includes a percentage of return on invested capital.

5. Structural analogy method. The essence of this method is that when setting the price of a new product, the structural price formula is determined based on its analogue. To do this, use actual or statistical data on the share of basic elements in the price or cost of a similar product. If it is possible to accurately determine one of the price elements for a new product, for example, material costs, consumption rates, etc., then by transferring the structure of an analogue to a new product, an estimated price can be calculated.

In domestic practice, cost methods are used when setting prices for:

Fundamentally new products, when it is impossible to compare them with manufactured products and the amount of demand is not sufficiently known;

Products manufactured according to one-time orders with individual production features (construction, design work, prototypes);

Goods and services for which demand is limited by the solvency of the population (repair services, essential products).

Demand oriented.

In this case, prices are determined on the basis of marketing estimates, i.e. based on market research.

Almost all enterprises, when setting the price for their products, take into account the demand factor in one way or another, since if the price exceeds the level that consumers agree to, the product simply will not be sold. Therefore, this method is often used in conjunction with other pricing methods or, in the case of a unique product, can be used independently in the first place.

This method makes it possible to implement a high price strategy (premium pricing or “cream skimming”), which is used by the company, as a rule, under the following conditions:

There is very high and increasing current demand from a fairly large number of buyers;

Production costs make it possible to maintain efficient production output, and financial results contribute to increasing the production of a new product and its supply on the market;

A high initial price will not attract new competitors to the production of goods;

The high price corresponds to high quality and does not interfere with attracting new customers.

Using this method requires a lot of work to study the market, demand, elasticity; the company must have the financial capabilities and specialists for expensive research. The method is closely related to the differentiation of one's product and the differentiation or segmentation of the market.

When studying potential demand, research is carried out to identify:

Ideas about price and “price range” for most buyers;

Reactions to price changes (elasticity) by asking questions about the possibility of purchasing at different prices;

Possibility and necessity of price differentiation in accordance with purchase costs, solvency, demographic, psychological and other characteristics of buyers.

The disadvantage of this method is that the information is distorted due to the absence of the moment of purchase as a fact.

Test sales may also be carried out. In this case, after determining an acceptable price range, it is varied based on monitoring consumer reactions to optimize the revenue-sales volume combination.

Auction prices for unique or prestigious items are also examples of demand-driven pricing.

Focus on competitors.

If the price determined on the basis of production costs is, as a rule, the lower calculated level, and the price determined on the basis of demand is the upper level, then the designated range is the so-called playing field, where the expected price will most often be located.

Typically, a company is forced to build its policy taking into account the existence of competitors; it tends to be aware of its competitors' price-setting practices.

One of the methods of pricing in this case may be targeting competitors. If there is a clear leader in the market, then the rest will follow him. Moreover, price leadership can be dominant when there is a company in the industry that has low costs, and therefore clear price advantages over others. Or there may be barometric leadership, when the company’s price changes are supported by other producers who recognize the leader’s ability to set prices in full accordance with changing market conditions.

With this method, the manufacturer is guided by the competitor’s prices, and taking into account its own costs and demand plays a subordinate role here. The manufacturer sets the price of the product slightly higher or slightly lower than that of its closest competitor. This is only possible in a market with homogeneous products. By relying on this method, the company gets rid of the risk associated with setting its own price in the sense of its acceptance by the market.

In addition, in conditions of strong competition, a firm has little chance of influencing market prices. At the same time, in a pure oligopoly, an enterprise has the practical opportunity to maintain its price for a long period.

Another method of determining price within a specified range between the minimum and maximum is active pricing, which involves leveraging the firm's competitive advantages, such as cost leadership and product differentiation.

Cost leadership allows a manufacturer to set a lower price for its product than its competitors and still make a profit.

This can be achieved by saving:

On the range of products due to the inclusion in the company’s “portfolio” of goods that have a common set of costs: the more costs that are common to the goods, the greater the synergy obtained from expanding the “portfolio”;

Due to the scale of production: there is a tendency for costs to decrease as production volumes increase;

Through the accumulated experience associated with learning by doing: the more a company produces, the more it learns about how to make production efficient.

Product differentiation occurs when a firm produces a product that differs from competitors' products in some way that is attractive to customers. As a result, the firm has the right to increase the price depending on the presence of such distinctive features, and the price premium must exceed the costs incurred in connection with imparting the distinctive features to the product. Both the consumer properties of the product itself and the after-sales service can be unique.

Many products are sold at established standard prices, while their quality exceeds consumer expectations. In this case, the main competition revolves around the functionality of products sold at one standard price. This situation is characterized as flexible competition. In this situation, the advantage goes to the company that is able to provide the best consumer properties of the product at a given standard price. The most important factor in flexible competition is a company's ability to innovate quickly.

In fact, the prices of different companies producing similar products may vary significantly. There are several reasons to explain these discrepancies. One of them is different production technologies. Some companies' production facilities are better suited to fulfill a given order, resulting in cost benefits for the companies. Another reason may be the degree of loading with orders at the time the price is set. Firms that are not fully loaded can set reasonable prices, hoping to receive additional orders.

Another reason for large price discrepancies is different cost accounting and pricing methods. Many companies use valuation methods that do not reflect the actual level of their costs. Traditional cost accounting methods are misleading in many cases and can cause serious problems in some situations if they are used to set prices. In large-scale production and in the manufacture of relatively simple products, traditional cost accounting methods lead to overestimation of costs, while for small-scale and technically complex products costs are inflated. Thus, companies have no idea about the real profitability of certain products or sales.

Consequently, any company that implements more accurate cost accounting methods, such as by activity, will gain a competitive advantage.

Unless a company has become a cost leader, it must know its true costs in order to compete on price.

The use of methods focused on demand and competition will give similar results if the enterprise enters the market with a product already available on it in the absence of price collusion among competitors (the selling price of the product corresponds to the demand price and is not imposed on the market).

Introduction

The long-term goal of creating, operating and developing an enterprise of any form of ownership is to maximize the volume of profit or “enterprise value”, i.e. the amount of money that can be received by selling its assets. The most flexible and significant instrument of an enterprise's commercial policy is price. It is prices that determine the structure of production and have a decisive impact on the movement of material flows, the distribution of the commodity mass, and the level of profitability of the enterprise.

For independent commodity producers working for the market, regardless of their form of ownership, the question of prices is a question of their existence and well-being. The correct methodology for setting prices, reasonable pricing tactics, and the consistent implementation of a deeply justified pricing strategy constitute the necessary components of the successful operation of any commercial enterprise in the harsh conditions of market relations.

Prices serve as a means of establishing certain relationships between the company and customers and help create certain ideas about it, which can have an impact on its subsequent development. They determine the profitability and profitability and, therefore, the viability of the company, are an essential element determining the financial stability of the company, and the strongest weapon in the fight against competitors.

It must be taken into account that pricing is one of the most complex and responsible sections of management. Thus, incorrect pricing decisions can not only worsen the financial and economic performance of an enterprise, but also take them beyond acceptable limits, which can lead the enterprise to bankruptcy. In addition, pricing decisions can have long-term consequences for consumers, dealers, competitors, and the company itself, many of which are difficult to predict and, accordingly, quickly prevent undesirable trends after they appear.

Pricing methods for enterprise products

Every product has a price, but not every enterprise is able to independently set the price at which it wants to sell its product. If products are not differentiated and competitors are numerous, the enterprise does not have market power and must accept the price set by the market. Depending on the characteristics of the product, the size and financial power of the selling company, and the goals it sets, various methods can be used to calculate the price. Kryuchkova O.N., Popov E.V. Classification of pricing methods // Marketing in Russia and abroad. - 2004.- No. 4.- P. 32-50.

The most common methods for setting prices for goods are:

based on production costs;

by return on capital;

demand-oriented;

at the current price level.

Setting the price level in market conditions consists of finding a price that would represent the optimal balance between what the buyer would like to pay for this product and the company’s costs in producing it. Therefore, pricing should be based primarily on factors related to demand, that is, on an assessment of how much the buyer can and wants to pay for the product offered to him. The importance of costs when setting prices should not be exaggerated. In practice, as a rule, a company first of all tries to establish at what price it could sell its product on the market based on the nature of demand, competition, quality goods, and then determine their production, commercial and administrative costs corresponding to such a price and varying depending on market conditions.

Methods based on the cost approach can be divided into the following groups:

Full cost method;

Minimum cost method;

Average cost method;

Standard cost method

Target pricing method.

The essence of the method based on determining total costs is to sum up total costs [variable (direct) plus fixed (overhead) costs] and the profit that the company expects to receive.

The main advantage of this method is its simplicity and convenience, but it has two big disadvantages:

When setting the price, the existing demand for the product and competition in the market are not taken into account, so a situation is possible when the product at a given price will not be in demand, and competitors’ products may be better in quality and better known to the buyer due to advertising.

Any method of attributing fixed overhead costs (for example, rent), which are the costs of managing an enterprise and not the costs of producing a given product, to the cost of a product is conditional. It distorts the true contribution of the product to the enterprise's income.

The method for determining the price using this method is:

where P is the price of the product;

C - production costs;

Rс - product profitability to costs, %.

The minimum cost method involves setting prices at a minimum level sufficient to cover the costs of producing a specific product, rather than by calculating total costs, including fixed and variable costs of production and distribution. Marginal costs are usually determined at the level at which it would be possible to recoup the amount of minimum costs. Selling a product at a price calculated using this method is effective in the saturation stage, when there is no sales growth, and the company aims to maintain sales volume at a certain level. Such a pricing policy is also rational when conducting a campaign to introduce a new product to the market, when a significant increase in sales volumes of the specified product should be expected as a result of its offering at low prices.

The method of “averaged costs” is that when setting prices, not the full, but the average costs of producing a unit of product are included in the calculation. Average costs are most often determined over the period of the economic cycle. The value of average costs will be lower, the larger the volume of output, since average fixed costs are inversely related to production volume.

Under the standard production cost method, costs are calculated before the production process begins. Cost calculation is carried out on the basis of established standards for the costs of raw materials, fuel, materials, and depreciation. The entire calculation is carried out in relation to the standard, or normal, volume of production capacity utilization (usually 85 - 90%).

Based on the target pricing method, the cost per unit of production is calculated taking into account the sales volume, which ensures the target profit. If the cost is transformed due to a decrease or increase in the utilization of production capacity and sales volumes, use indicators of the degree of utilization of production capacity, taking into account the influence of the market situation and other factors, and then determine the selling price per unit of production, which, under these conditions, provided would be the target profit. But with this method, the price is calculated based on the interests of the seller and does not take into account the buyer’s attitude to the calculated price. Hence, this method requires some adjustment to take into account whether the intended buyers will purchase the product at the estimated price or not.

The method of determining the selling price based on the analysis of the maximum peak of losses and profits allows one to determine the volume of production and sales corresponding to the case when the total amount of profits and the total amount of costs are equal. This method is used when the company’s goal is to identify the price that provides the opportunity to obtain maximum profit. Zheltyakova I.A., Makhovikova G.A., Puzynya N.Yu. Prices and pricing. Short course / Study guide. - St. Petersburg Publishing house "Peter", 2004.

Determination of prices with a focus on competition. When a firm has a monopoly position in the market, it is able to make the most profits. But as the market matures, many firms appear that are actively entering it and developing competition through the implementation of differentiation and diversification strategies. In such conditions, when determining the selling price, a method that takes into account the competitive position of the company and the given product or service, as well as the entire competitive situation in the market, is effective.

In this case, the price of goods and services sold is determined through analysis and comparison of the capabilities of a given company’s goods in comparison with competing firms in a particular market, as well as through analysis and comparison of prices prevailing in the market. Here they use the method of pricing by following the prices of the leading company in a given market; method of determining prestigious prices and competitive method of determining prices.

Setting prestigious prices. Recently, there has been an expansion of the range of prestigious goods. They have a luxury level of quality. If these kinds of goods are sold at low prices, they will become easily accessible and lose their main appeal to the market of prestigious buyers. At the same time, it is realistic to expect a significant increase in sales volumes when selling prestigious goods at high prices, but slightly below the level prevailing in the market. For such goods, it is advisable to set prices higher. This will serve as a powerful incentive for buyers counting on the demonstration effect of the purchased product, and will serve as the basis for an even higher level of sales.

Market pricing methods

a) consumer assessment method (demand orientation). This method is closely related to product differentiation and market differentiation. Allows you to implement a high price strategy.

b) the method of following the leader (competition orientation). With this method, the manufacturer is guided by the prices of the competitor, and taking into account its own costs and demand plays a subordinate role here. The manufacturer sets the price slightly higher or slightly lower than that of its closest competitor. This is only possible in a market with homogeneous products. Based on this method, the company gets rid of the risk associated with setting its own price and adapting it to the market.

c) the “sealed envelope” or tender pricing method.

Used in cases where several companies are in serious competition for a particular contract. The winner is the one whose offer price provides the seller with maximum profit.

d) a method of determining prices, focused on finding a balance between production costs and market conditions.

Parametric Methods

Firms often feel the need to design and develop the production of products that do not replace previously developed ones, but complement or expand the existing parametric range of products.

A parametric series is understood as a set of structurally and (or) technologically homogeneous products designed to perform the same functions and differing from each other in the values ​​of the main technical and economic parameters in accordance with the production operations performed

Parametric pricing methods include the method of specific indicators, used to justify prices for simple products included in small groups characterized by the presence of one main parameter. Such parameters include productivity, power, content of useful components, capacity, etc. These indicators characterize the main consumer properties of the product and determine the general level of its cost and price. Specific indicators show what the price per unit of the main technical and economic parameter Tsu is, and are determined by the following formula:

where is the absolute value (level) of price; -- the value of the main parameter.

Knowing the value of the specific indicator, you can determine the price of a new product using the formula

where is the value of the main parameter of the new product.

The disadvantage of the specific indicators method is that it takes into account only one (even the main) parameter. The bulk of products, especially modern complex types of products, are characterized by a complex of technical and economic parameters. Therefore, calculating prices based on one parameter is not sufficient for the economic assessment of most types of products.

The scoring method consists of assessing each individual technical and economic parameter with a certain number of points, the summation of which gives a comprehensive assessment of the consumer properties of the product. The product price is determined by multiplying the sum of points by the value of one point or by multiplying the price of the basic product by the ratio of the sum of points of the new and basic products:

where is the price of the basic standard product; is the price of one point;

The sum of points for new and basic products, respectively.

The aggregate method consists of summing up the prices of individual structural parts of products included in the parametric series, adding the cost of original components, assembly costs and standard profit.

Thus, we can draw the following conclusion. The most flexible and significant instrument of an enterprise’s commercial policy is price, the level of which differently affects all the main indicators characterizing the quantitative and qualitative results of the enterprise’s activities (profit, profitability, turnover, market share, image, etc.).

The correct methodology for setting prices, reasonable pricing tactics, and the consistent implementation of a deeply justified pricing strategy constitute the necessary components of the successful operation of any commercial enterprise in the harsh conditions of market relations.

THE CONCEPT OF PRICE AND PRICING. INTERNAL AND EXTERNAL FACTORS OF PRICE FLUCTUATIONS. TYPES OF PRICES

Prices and pricing are one of the key elements of a market economy.

Price– a complex economic category, because it intertwines all the main problems of the development of the economy and society as a whole. This applies to the production and sale of goods, the formation of their value, and the creation, distribution and use of GDP.

Price mediates all commodity-money relations. In an abstract sense, price is the monetary expression of the value of a product. In turn, the cost is determined by socially necessary labor costs (SLC).

When a unit of a particular good is exchanged for a certain quantity of another good, the latter becomes the commodity price of that good.

Pricing– the process of forming prices for goods and services. There are 2 main models:

1) market - operates on the basis of the interaction between supply and demand for a particular product on the market

2) centralized state pricing - the price is determined by a government agency (cost pricing)

One of the main problems in the activities of enterprises is how they set prices for their goods and services. The achieved commercial results largely depend on the price level. With few exceptions, price will always be a major factor in people's purchasing choices.

Factors influencing the price level:

The development of a market economy means a transition to a fundamentally different model for setting prices, which is associated with the need to take into account a complex set of price-forming factors that reflect the interests of the relevant business entities:

1. supply and demand. Given the total volume of supply and demand, an equilibrium price is formed that equalizes their sizes. With a general equilibrium volume, conditions are created for making a profit. The mechanisms of supply and demand were studied earlier; we only note that a number of non-price factors operate in the market, leading to a shift in the supply and demand curves. Demand is influenced by the number of buyers, their income, fashion, consumer tastes, changes in prices for related goods, forecasts, buyer expectations, etc. Supply, in turn, is influenced by changes in production costs, resource prices, taxes, and the number of sellers on the market, the price level for related goods, inflation expectations and other forecasts of sellers. Under the influence of these factors, there is a change in the demand for goods and their supply, which leads to a change in the supply and demand curve, causing a change in prices.

2. elasticity indicator, characterizing the sensitivity of consumers to price changes. Its knowledge provides marketing services with important information for assessing the company's pricing policy.

3. The price directly depends on the nature of the market. The considered pricing mechanism refers to the conditions of perfect competition. However, for the Russian economy the most acceptable analogue is the model of monopolistic competition with a large number of large enterprises. In these conditions, oligopolists and monopolists have the opportunity to influence the price by rigidly setting the volume of output and sales, dictating the prices of goods, the behavior of the manufacturer with his desire to increase production. By limiting its volume, it is able to obtain the desired profit through high prices.

4. The next important factor that enterprises need to take into account is government price regulation. It represents government intervention in the process of market pricing to achieve set goals (limiting monopolism, stabilizing the price level, targeted support for individual industries, segments of the population, etc.). State regulation of prices exists in all countries; in general, in developed countries it covers 10-15% of prices. At the same time, in conditions of inflation, shortages or overproduction, structural restructuring, and other crisis situations, regulation is strengthened.

Types of prices:

1. according to the nature of the serviced turnover:

Wholesale purchase and sale prices are the prices at which enterprises sell their products to other enterprises or sales organizations, usually in large quantities

Procurement prices are the prices at which the government buys products from agricultural enterprises or farmers

Retail prices – prices at which trade organizations sell products to the public

Estimated cost - the price at which construction products are paid

Prices and tariffs for services to the population. Tariffs may relate to wholesale trade (freight transport tariffs) and retail trade (passenger tariffs)

Discounts – markups (difference between wholesale and retail)

2. depending on government influence and regulation, as well as the degree of competition in the market:

Free (demand price - the price at which buyers of a product on the market are ready and able to buy a product; supply price (offer) - the price at which the seller offers a product on the market; production price - determined on the basis of production costs with the addition of the average profit for the entire advance capital)

Regulated - prices in respect of which the state sets any restrictions (guaranteed - their maintenance is ensured by government funding; recommended - set for the most important types of products; limit - the estimated maximum price level for future products; pledged - perform the functions of minimum guaranteed prices; threshold - minimum prices to ensure the company breaks even). 2 areas of price regulation: price limits - the maximum permissible increase or decrease in prices on the market during the trading season; fixed prices – prices for goods set by the state.

3. according to the method of installation and fixation:

Solid (constant) – does not change during the entire period of delivery of products under the contract

Movable – can be revised if the market price changes by the time of delivery

Sliding – installed on products that require a long production time.

These prices are necessarily fixed in the contract.

4. taking into account the time factor:

Fixed price (unlimited period)

Seasonal price (type of purchase or retail prices, determined by applying a discount)

Stepped (a series of successively decreasing prices for products at predetermined points in time on a predetermined scale)

5. by the method of obtaining information about the price level:

Reference – used as indicative information when setting prices for similar goods or when analyzing prices and their relationships, published in catalogs and price lists of economic journals

List price - a type of reference price published by the selling company in price lists

Calculated - used in contracts for non-standard equipment, usually produced according to individual orders.

6. depending on the type of market:

Auction – reflect the progress of sales at the auction.

Exchange quotations – price levels of goods sold through the exchange; the exchange contributes to the formation of wholesale market prices for mass, qualitatively homogeneous standardized goods.

Bidding prices – tenders

7. intra-company prices (transfers) - used when selling products between divisions of the same company or different companies belonging to the same association

8. according to delivery terms:

Price – net – price at the place of purchase and sale

Price is gross. This price is an invoice price. Determined taking into account purchase and sale (types and amounts of product taxes, availability and level of discounts, type of free and insurance conditions). Prices depend on the type of “free”, which determines who bears the main transportation costs for the delivery of goods: the buyer or the seller. The term “free” shows to what point along the way the goods move from the seller to the buyer, the seller reimburses transportation costs.

9. world prices - prices at which large export and import transactions are carried out, characterizing the state of international trade in specific goods. In practice, world prices for various groups of goods are determined as follows:

For commodities - determined by the price level of exporting or importing countries or the prices of the relevant exchanges and auctions

For industrial and technical products - prices from the world's leading manufacturers

For consumer goods - determined by prices published in catalogs of leading large trading houses.

FUNCTIONS PRICES

The concept of “function” means the external manifestation of an object in a given system of relations.

A function is a way of realizing the inner, deep essence of an economic category in reality.

The price function is an external manifestation of its internal content. Functions can only include those that are typical for each specific price, without exception. The functions of price are determined by the functions of money, because there are no prices where there is no money. Without price, money has no economic meaning.

1) Accounting the function is determined by the very essence of the price, i.e. is a monetary expression of value. Prices show how much it costs society to satisfy a specific need for a particular product. The price takes into account how much labor, raw materials, materials, and components were spent on the manufacture of the product. Characterizes the efficiency with which labor is used. Ultimately, the price shows not only the total costs of production and circulation of goods, but also the amount of profit. For normal progressive development of the economy, it is necessary that the sum of prices correspond to the totality of goods created. Violation of compliance leads to disruption of the reproduction process.