Definition Standard Cost Pricing. Description.
Standard Cost Pricing is an accountants approach to pricing
wherein standard variable cost per unit are calculated by adding the total
variable costs of production (materials and labor) to the cost of bought-in
components and dividing the sum by the number of units produced. This type
of pricing can be frequently found in manufacturing environments.
A benefit of this approach is its simplicity. Also it is fact-based.
A disadvantage is the risk of underestimating customer demand and the value
as perceived by the customer as important mechanisms. This may result in overpricing
and underpricing. Furthermore the role of competitors is ignored. Historical
accounting costs are used rather than replacement value.
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Standard Cost in Agribusiness
"I have working with standard costs in the sugar cane industry in Brazil. The question is: is this methodology a good tool to manage the business?" |
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Standard Cost Pricing Special Interest Group
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Compare with:
Cost-plus Pricing |
Target Pricing |
Marginal Cost Pricing
| Penetration Pricing
| Price Skimming
| Perceived Value
Pricing |
Psychological Pricing |
Discount Pricing |
Promotional Pricing
| Competitive Pricing
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