Classification of prices for products. Basic approaches, essence, signs
The price is a fee for which the seller is ready to sell a unit of his goods. Its monetary expression is called value (usually these concepts are considered as identical). In fact, it is a kind of exchange rate. The price system and their classification is a very large section of the economy. Today we will get acquainted with its main provisions. The article will consider the essence of pricing and price classification.
The price system is the relationship between their various types. It consists of a large number of elements. Among them there are both individual prices and their groups. The relationship between prices is caused by the dependence between enterprises, industries and industries, as well as a single process of formation of the cost of production. A change in the value of a single product may lead to a change in the level of value and other goods. This is particularly pronounced in large industries (energy, communications, transportation, etc.d.) Now let's go directly to the types of prices and their classification.
In economics, there are different signs of price classification. The first one is the sphere of trade. Here, indicators such as the type of sales, their scale and the nature of the products sold are taken into account. On this basis prices are: wholesale, retail, purchasing and tariffs. Each of the types will be considered separately.
As the name implies, this is the cost at which products are sold directly by large enterprises, on a large scale. The system of wholesale prices operates in the trade and marketing relations of companies, as well as in the sale of goods through sales offices, shops, trading markets, and other organizations that sell products in bulk, that is, in significant quantities. As a rule, the need for wholesale arises in the case when production is localized in certain localities, and the scope of consumption has a more extensive radius.
These are the prices at which the products are sold in the retail network, that is, sold to individual buyers, in a relatively small volume. Through retail, they usually serve end-users.The price of such goods is always higher than the wholesale by the amount of the premium, which compensates for the costs incurred and creates a profit for the organizations or institutions of the retail trade.
These are the prices at which a country buys products from enterprises, organizations or ordinary people. In the economic practice of the countries of the former CIS, state purchase of agricultural products directly from producers has always been widespread. Money for the purchase is taken from the budget, and the products themselves are used to supply the army and other budget organizations, create reserves, and others are needed. Naturally, the procedure is not limited to the products of the agricultural industry, and the term “purchase value” in the price classification can be interpreted more broadly.
Considering the types of prices and their classification, it is worth bearing in mind that prices for services and activities that do not create goods in a material and clothing form, but can change the quality of an existing product, have special specifics. The production of a service usually begins with its consumption, that is, after the completion of a monetary transaction.Applicable to material goods, it would be impossible. The specificity of services as a type of production activity affects the pricing of services. Such prices are called tariffs and prices. When establishing such a cost, it is not only the amount of work that is taken into account, but also the amount of time it takes to carry it out. A simple example of a tariff is the cost of payment for household and utility services.
Price classification, briefly discussed above, is the most common. However, there are others. The next sign of price classification is the degree and method of regulation. In this regard, prices are: rigidly fixed, regulated, contractual and free market. Now more about each of the species.
Rigidly fixed (solid)
The level of such prices is determined by government agencies, and is mandatory recorded in the relevant documents. At the same time, manufacturers, as well as sellers of goods, have no right to change the value of value, in any direction. Violation of this rule is prosecuted. In the economy, such prices are widespread, they are also called state.Pricing authorities have a monopoly on the appointment and change of state value.
This system was especially widely used in the Soviet Union. The basis of state pricing, as a rule, is the cost principle. According to him, the price is the sum of the costs of issuing a unit of goods, to which the profit is added, or from which the state subsidy is deducted.
Regulated prices have a special role in price classification. The bottom line is that their value can be regulated by government agencies. At the same time, unlike the previous type, the impact of these organs is indirectly limited. It manifests itself mainly in manipulations aimed at changing the supply and demand of a particular product or product group.
For example, if you need to establish a higher cost of a product in order to stimulate the development of production that produces it, government agencies can reduce taxes that are paid by consumers of a given product group. As a result, the demand for goods will expand, which will soon lead to an increase in its price.Similarly, you can achieve lower prices.
Often, to limit the price of a product by the upper limit is used to increase the purchasing power of citizens, and the lower limit - in order to stimulate the growth of production.
In fairness, it is worth noting that both approaches have a number of drawbacks that minimize the prospect of using them in real life. By setting, for example, the upper limit of the value of a product, the state deliberately makes it lower than the equilibrium price level. As a result, supply is declining, and demand is growing. Thus, there is a shortage of goods, in which conditions, buyers have a desire to purchase the missing goods at any price. All this leads to the emergence of a black market, the prices on which, of course, will be higher than the equilibrium, due to the huge amount of costs (bribes, risk, etc.). In the end, both buyers and the state suffer. This situation is also not in the hands of manufacturers - it is unprofitable to sell products at a low price, so they have to reduce production volumes.An unfavorable picture is also observed when setting the lower limit of value.
Regulation of the value of prices can also be carried out by approval of the limit of profitability (profitability) by the relevant authorities. This approach is more successful in the realities of a centralized economy. The state appoints the margin of the relationship of profit to the cost of goods, say 50%. Consequently, if the cost of a single unit of goods was, for example, $ 100, then the seller cannot sell it for more than $ 150. The establishment of a margin of profitability, as a rule, is introduced for monopolistic producers, who, due to the lack of competition, can set any price for their product. In some cases, the permissible degree of deviation of the actual price from the fixed one is established.
The impact of public authorities on the value of goods through regulation can be carried out both in a centrally managed and in a market economy. In the latter case, regulation usually extends to products and services that are vital for the country and society.These can be: land, fuel, energy, strategic raw materials, public transport, essential goods, and so on. Such an important place is occupied by regulated prices in the pricing of products.
The value of the contractual price is determined by the agreement between the buyer and the seller, which precedes the act of sale and can be documented in the form of a contract. In modern practice, contracts often allocate a section in which you can adjust the level of the cost of goods. In some cases, the document does not indicate the absolute value of the price, but the range within which it can vary. Also, the contract may specify the prospect of changes in the fixed value due to inflation, the adoption of new laws, force majeure situations and other reasons that may make the sale at a previously established price unprofitable.
Free market (equilibrium)
Above mentioned such a thing as the equilibrium value. It plays an important role in the price system and their classification. Market value is exempt from direct intervention by government agencies, and is based on market conditions and the laws of supply and demand.Such a price is called equilibrium for the reason that with it the volumes of supply and demand are equal.
Theoretically, ideally, the market price of the goods should be formed according to the results of free bargaining between the seller and the buyer. Nevertheless, it is impossible to avoid the impact of a number of factors (both economic and psychological) on the establishment of value. The correct solution to this problem is to establish an equilibrium price, which, on the one hand, is equal to the value of the purchased goods for the consumer, and on the other hand, covers the costs of production and sale. The process of transition of a fixed state value to a free market is called price liberalization.
The next sign of price classification is based on their dependence on each other. In this regard, allocate: comparable, real and relative cost. Consider them together.
Comparable, real and relative
In economic planning and statistics, along with current prices, comparable prices are also used, which are also called constant. They are objectively necessary in a situation when inflation takes place.For example, if it is known that the family used to spend 5,000 rubles on food before, and now it is spending 10,000, this does not at all mean that the quantity or quality of food consumed has doubled. There is a double increase in the cost of food. To analyze the change in prices, it is necessary to establish how much money would go to feed the family if prices had not changed. Hence the need to use a comparable fixed cost, which is calculated using a price index - a coefficient reflecting the change in value.
In the transition to a spasmodic and, as a rule, uncontrolled rise in prices instead of the specified index, or in addition to it, an indicator of the level of inflation is often used, which expresses the increase in value in percent. It is calculated quite simply. To do this, the percentage index of growth in value over a certain period should be reduced by 100%. Thus, the price index is an indicator of price growth, and the rate of inflation is an increase.
For these purposes, real cost is also sometimes used. It is formed relative to the general price level.While making consumer decisions, the buyer can also rely on relative (or comparable) prices. They are expressed in the value of the goods, compared with the value of the related products of another manufacturer or in another region. Thus, such a concept is formed as the ratio of prices. It is usually applicable to interchangeable goods, which are called substitutes.
We have already reviewed the basic price classifications. Now we will get acquainted with the prices, which have a place to be in market relations, but are used less widely.
Project. Such prices are used at the design stage of a new product, object, product, material, semi-finished product or service, as well as for the production of newly developed products.
Limit. They represent the maximum level of project prices, determined taking into account their approximate, approximate nature.
Estimated cost. It is used in the construction industry. Determined at the design stage, taking into account all the costs of creation and equipment. This price is calculated on the basis of estimates, providing for all items of expenditure on the creation of a finished construction object.
Estimated. So call all the prices that are determined through calculations.
Expected. Prices that are expected in the future.
Price List. The cost of goods or services can be recorded in a document called the price list. The value of such a cost is called the list price. In state pricing, the price list in some cases serves as the primary price document. In a market economy, it is more often used as a reference document.
Expected and planned. These prices are set in the course of planning and management work. Predictive prices in a market economy are the basis for drawing up business plans, business projects, indicative plans and other things.
Exchange, commission and auction. The price level is often predetermined by the type of market in which it is formed. In this regard, isolated exchange, commission and auction prices.
World. The difference in the cost of similar goods in different countries led to the need to take into account world prices. They represent the actual value of the goods or services on the world market. Such prices are determined by enterprises engaged in international trade. Usually they are expressed in freely convertible currency.
Having become acquainted with the essence and classification of prices, it is worthwhile to briefly consider the pricing process. It is based on a number of principles.
This term refers to the continuously applicable provisions underlying the price system. Below are the main ones.
Principle of science. It is based on a deep analysis of all market factors and the price system in force in the economy. It also involves the identification of trends, forecasting changes in the level of costs, product quality, demand and other indicators. The scientific nature of justifying the cost strongly depends on the completeness of the pricing process with a variety of information.
Principle of orientation. It assumes a clear formulation of the main economic and social problems that should be solved by setting prices. These may be, for example, the problems of social protection of citizens, the orientation of the economy towards mastering a new technology, or improving the quality of goods.
Principle of continuity. As the product “evolves” from raw materials to a product ready for sale, it goes through a series of stages, each of which has its own value.In addition, existing prices are regularly amended in connection with the development of the production of new goods and the cessation of the release of old ones. With the development of market relations and increasing competition, this process is gaining more and more speed.
Principle of unity and control. Its essence lies in the fact that the pricing process should be constantly monitored, and its result should be beneficial to all.
Control is of two types:
- State. Conducted by federal or regional pricing authorities, where price inspections operate. Inspectorates for the protection of consumer rights and the quality of goods that operate under the trade authorities may also be involved in controlling the value of goods.
- Public. Conducted by public consumer organizations, on the basis of relevant laws.
Today we have discussed the concept and classification of prices, as well as the basic principles of their formation. As a summary, it can be noted that the price refers to the fee for which the seller or manufacturer offers their product to the buyer, which can be either the final consumer or the intermediary.Classification of prices in the economy is carried out on a number of grounds. The main ones are: the sphere of trade, the method of regulation and the type of dependence.