Selling Price

Selling Price

Selling price is a term that is used for the price at which a seller sells the product to a buyer. The selling price is the final price of the product distribution chain. The selling price can be both more and less than the cost price. Cost price refers to the price at which the shopkeeper bought the product from the manufacturer. 

Selling Price Meaning

Selling price meaning is the cost for the money exchanging method of a product. Some selling prices are standard prices as well as some selling prices can keep fluctuating. Selling prices can fluctuate in many ways. There are many factors affecting the final selling price.

Some are as follows: 

• Consumer interest

• Demand and supply

• Competition

• Substitute of the product available in market

• Product distribution market channel

Consumer Interest

If a consumer likes the product and gives excellent reviews about it, the effect would become famous, and hence the company would manufacture more and more, which means there would be clearance sales, discounts, and a decrease in selling price. 

Demand and Supply

Consumer interest is also a factor that influences demand and supply mainly. When the consumer demands a product, it increases the selling price. With more demand, the product supply would also increase. However, with reference to supply, when the supply increases, the demand decreases, but when the supply decreases, it doesn’t affect demand initially. 

Competition

Nowadays, there are a lot of business tycoons and market rivals fighting for their esteemed powerful positions in the market. This business competition influences the selling price since most of the population consists of middle-class people, so reasonable rates attract the customers. So to attract customers, the companies launch offers, discounts, festival sales, etc. 

Substitute of the Product Available in Market

The rarer the product, the more costly it is. If a substitute of a product is available in the same market, the prices would naturally decrease as there would be a competition spark between the two or more companies. 

Product Distribution Market Channel

Indirect distribution is the most common method used to distribute the product so that the customers can reach it. The final entity that sells the product to the consumer is called a retailer. The selling price, sometimes in such cases, is lower as there is no such type of intermediary due to the fact that the consumer comes in direct contact with the product. Such retailers are Department stores, Supermarkets, D-Marts, Big Bazaar, etc. A factor that affects the selling price is the marketing chain. Though indirect distribution is the most common chain, their other types too as follows:

• Direct Selling

• Email Marketing

• Catalog Direct

• Value-added Resale

• Digital Advertisements

• Events

• Network Marketing

• SEO Marketing 

Selling Price Formula

The price at which the shopkeeper receives the product is called cost price. The extra cost added to the cost price results in the selling price. Following is the Selling price formula with the cost price formula too. 

• Selling price = cost price + profit margin(when profit is given)

• Selling price = cost price- loss (when poss is given)

• Cost Price = selling price – profit margin (when profit is given)

• Cost Price = selling price + loss (when the loss is given)

Selling Price Calculator

The selling price calculator method is as follows:

• First, you’ll have to find the profit or loss.

• After that, you‘ll have to add or subtract the cost price. 

• Perform the equation, and you get the selling price. 

Profit And Loss

Profit refers to the extra income earned, and loss means existing income lost. If the cost price is more than the selling price, the shopkeeper would be at a loss; however, if the cost price is less than the selling price, then the shopkeeper would be in profit. Following are the formulas to find profit and loss:

• Profit = Selling price – Cost price (when the selling price is greater than the cost price). 

• Loss = Cost price – Selling price (when cost price is greater than the selling price). 

• Percentage Profit = Profit/Cost price x 100 

• Percentage Loss = Loss/Cost price x 100

Selling Price Examples

Example 1: What was the selling price of a product whose cost price was ₹50 with a profit of 20%. 

Answer: SP = CP + Profit 

               SP = 50 + (20/100 x 50)

               SP = 50 + 10 

               Selling Price = ₹60

Example 2: Ramesh sold a toy car. The selling price was ₹100, and he faced a 17% loss. Calculate the cost price. 

Answer: CP = selling price + loss

               CP = 100 + (17/100 x 100)

               CP = 100 + 17

               Cost price = ₹117

Example 3: My aunt went to buy vegetables. The seller got 1 kg for ₹500, and my aunt bought ½ kg for ₹200. Identify who is in profit. 

Answer: In this Condition, we’ll have to find the cost price for ½ kg as the selling price is ₹200. 

The cost price of ½ kg = Cost of 1 kg/2

CP = 500/2 

The cost price of ½ kg = ₹250 

Comparing the cost price and selling price of ½ kg vegetables,

Cost price = ₹250 and Selling price = ₹200

                          SP < CP

The selling price is less than the cost price. Hence the shopkeeper is at a loss.

Conclusion

The selling price is important in our daily lives as for some people the selling price is their earning and for some people selling price is something they spend all their money on. It is very important in an economy that the selling price is reasonable so it can be fit for the standards of all classes of the social hub.