Price vs. Cost — What's the Difference?
By Tayyaba Rehman — Published on September 15, 2023
"Price" is the amount of money required to purchase something. "Cost" refers to the expenditure or sacrifice made to obtain something.
Difference Between Price and Cost
Table of Contents
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Key Differences
"Price" is a specific term that refers to the monetary value attached to a product or service, which is the amount a consumer needs to pay to acquire it. It's a figure set by sellers based on various factors like demand, supply, and competition. Conversely, "Cost" encompasses a broader spectrum, considering all the resources expended in producing a good or service, including raw materials, labor, and overhead.
When consumers buy an item at a store, they pay the "Price" as marked or negotiated. This price often includes the seller's profit, taxes, and other additional charges. On the other hand, the "Cost" is what the producer or seller has spent to create or source the item, which determines their profit margin when the item is sold.
In the real estate world, one might come across terms like the "Price" of a house, which is the amount for which a property is listed. In contrast, the "Cost" of the house would refer to the total expenditure involved in building it, such as materials, labor, and other related expenses.
From a business's perspective, understanding the distinction between "Price" and "Cost" is essential. The "Price" is what they charge their customers, which should always exceed their "Cost" to ensure profitability. If the cost rises, businesses might have to adjust their prices to maintain their profit margins.
Comparison Chart
Nature
Amount charged to consumers.
Expenditure involved in production.
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Determinant
Demand, competition, profit margin.
Materials, labor, overhead.
Purpose
To generate revenue.
To assess expenditure.
Outcome
Revenue for sellers.
Insight into profitability.
Impact on Profit
Determined by subtracting cost.
Directly affects profitability.
Compare with Definitions
Price
Price is the monetary value attached to a product or service.
The price of the dress was $50.
Cost
Cost refers to the total expenditure incurred to produce a product.
The cost of manufacturing the toy was surprisingly low.
Price
Price includes the seller's intended profit margin.
The business set a price ensuring a 20% profit margin.
Cost
Cost includes materials, labor, and overhead.
Rising raw material prices increased the cost of production.
Price
Price can be negotiated in certain scenarios.
She managed to reduce the price after some negotiation.
Cost
Cost provides insight into the profitability of an item.
With a low production cost, the company enjoyed high profits.
Price
Price determines the amount a consumer pays to acquire something.
The price of the concert ticket seemed quite high.
Cost
Cost can vary based on factors like efficiency and resources.
Technological advancements reduced the cost of production.
Price
Price is influenced by factors like demand and competition.
Due to high demand, the price of the gadget skyrocketed.
Cost
Cost determines the base before setting a selling price.
Knowing the cost helps in pricing the product competitively.
Price
A price is the (usually not negative) quantity of payment or compensation given by one party to another in return for one unit of goods or services. In some situation, the price of production has a different name.
Cost
In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost.
Price
The amount as of money or goods, asked for or given in exchange for something else.
Cost
An amount paid or required in payment for a purchase; a price.
Price
The cost at which something is obtained
Believes that the price of success is hard work.
Cost
The expenditure of something, such as time or labor, necessary for the attainment of a goal
"Freedom to advocate unpopular causes does not require that such advocacy be without cost" (Milton Friedman).
Price
The cost of bribing someone
Maintained that every person has a price.
Cost
Costs(Law) Charges incurred in bringing litigation, including court fees and charges that may be payable by the losing party, but usually not including attorneys' fees.
Price
A reward offered for the capture or killing of a person
A felon with a price on his head.
Cost
To require a specified payment, expenditure, effort, or loss
It costs more to live in the city.
Price
(Archaic) Value or worth.
Cost
To have as a price.
Price
To fix or establish a price for
Shoes that are priced at sixty dollars.
Cost
To cause to lose, suffer, or sacrifice
Participating in the strike cost me my job.
Price
To find out the price of
Spent the day pricing dresses.
Cost
Past tense and past participle costed To estimate or determine the cost of
The accountants costed out our expenses.
Price
The cost required to gain possession of something.
Cost
To incur a charge of; to require payment of a (specified) price.
This shirt cost $50, while this was cheaper at only $30.
It will cost you a lot of money to take a trip around the world.
Price
The cost of an action or deed.
I paid a high price for my folly.
Cost
To cause something to be lost; to cause the expenditure or relinquishment of.
Trying to rescue the man from the burning building cost them their lives.
Price
Value; estimation; excellence; worth.
Cost
To require to be borne or suffered; to cause.
Price
(transitive) To determine the monetary value of (an item); to put a price on.
Cost
To calculate or estimate a price.
I'd cost the repair work at a few thousand.
Price
To pay the price of; to make reparation for.
Cost
Amount of money, time, etc. that is required or used.
The total cost of the new complex was an estimated $1.5 million.
We have to cut costs if we want to avoid bankruptcy.
The average cost of a new house is twice as much as it was 20 years ago.
Price
To set a price on; to value; to prize.
Cost
A negative consequence or loss that occurs or is required to occur.
Spending all your time working may earn you a lot of money at the cost of your health.
The army won the battle decisively, but at a cost of many lives.
Price
To ask the price of.
To price eggs
Cost
(obsolete) Manner; way; means; available course; contrivance.en
Price
The sum or amount of money at which a thing is valued, or the value which a seller sets on his goods in market; that for which something is bought or sold, or offered for sale; equivalent in money or other means of exchange; current value or rate paid or demanded in market or in barter; cost.
We can afford no more at such a price.
Cost
Quality; condition; property; value; worth; a wont or habit; disposition; nature; kind; characteristic.
Price
Value; estimation; excellence; worth.
Her price is far above rubies.
New treasures still, of countless price.
Cost
(obsolete) A rib; a side.
Price
Reward; recompense; as, the price of industry.
'T is the price of toil,The knave deserves it when he tills the soil.
Cost
(heraldry) A cottise.
Price
To pay the price of.
With thine own blood to price his blood.
Cost
A rib; a side; a region or coast.
Betwixt the costs of a ship.
Price
To set a price on; to value. See Prize.
Cost
See Cottise.
Price
To ask the price of; as, to price eggs.
Cost
The amount paid, charged, or engaged to be paid, for anything bought or taken in barter; charge; expense; hence, whatever, as labor, self-denial, suffering, etc., is requisite to secure benefit.
One day shall crown the alliance on 't so please you,Here at my house, and at my proper cost.
At less cost of life than is often expended in a skirmish, [Charles V.] saved Europe from invasion.
Price
The amount of money needed to purchase something;
The price of gasoline
He got his new car on excellent terms
How much is the damage?
Cost
Loss of any kind; detriment; pain; suffering.
I know thy trains,Though dearly to my cost, thy gins and toils.
Price
The property of having material worth (often indicated by the amount of money something would bring if sold);
The fluctuating monetary value of gold and silver
He puts a high price on his services
He couldn't calculate the cost of the collection
Cost
Expenses incurred in litigation.
Price
Value measured by what must be given or done or undergone to obtain something;
The cost in human life was enormous
The price of success is hard work
What price glory?
Cost
To require to be given, expended, or laid out therefor, as in barter, purchase, acquisition, etc.; to cause the cost, expenditure, relinquishment, or loss of; as, the ticket cost a dollar; the effort cost his life.
A diamond gone, cost me two thousand ducats.
Though it cost me ten nights' watchings.
Price
The high value or worth of something;
Her price is far above rubies
Cost
To require to be borne or suffered; to cause.
To do him wanton rites, which cost them woe.
Price
A reward for helping to catch a criminal;
The cattle thief has a price on his head
Cost
The total spent for goods or services including money and time and labor
Price
Cost of bribing someone;
They say that every politician has a price
Cost
The property of having material worth (often indicated by the amount of money something would bring if sold);
The fluctuating monetary value of gold and silver
He puts a high price on his services
He couldn't calculate the cost of the collection
Price
United States operatic soprano (born 1927)
Cost
Value measured by what must be given or done or undergone to obtain something;
The cost in human life was enormous
The price of success is hard work
What price glory?
Price
Determine the price of;
The grocer priced his wares high
Cost
Be priced at;
These shoes cost $100
Price
Ascertain or learn the price of;
Have you priced personal computers lately?
Cost
Require to lose, suffer, or sacrifice;
This mistake cost him his job
Common Curiosities
What's the primary distinction between price and cost?
Price is what consumers pay, while cost is what producers spend.
Is the cost always monetary?
While often monetary, cost can also refer to time, effort, or other resources spent.
What determines the price of an item?
Price is influenced by factors like demand, competition, and desired profit margins.
Can two products have the same price but different costs?
Yes, differences in production efficiency or materials can result in varied costs.
Can the cost of a product be higher than its price?
Yes, if a business sets the price too low, it may not cover the cost.
Why might businesses adjust their prices?
Changes in cost, competition, or market demand can lead to price adjustments.
How do businesses ensure profitability?
They set prices that exceed their costs, accounting for other expenses too.
What's a fixed cost?
Fixed costs remain constant regardless of production volume, like rent or salaries.
How does high demand impact price?
High demand often leads to higher prices if supply doesn't keep up.
Are sales discounts deducted from the price or cost?
Discounts are deducted from the price, reducing the amount a customer pays.
What's variable cost?
Variable costs change with production volume, like raw materials or direct labor.
Can the price of a product decrease if its cost increases?
It's uncommon, but prices might be lowered for strategies like market penetration.
Do all businesses have the same costs for similar products?
No, costs can vary based on sourcing, efficiency, technology, and other factors.
Does a higher price always mean better quality?
Not necessarily. Price can reflect brand value, marketing, or other non-quality factors.
Do customers always know the cost of a product they buy?
No, customers typically see the price, while the cost is known to the producer or seller.
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Written by
Tayyaba RehmanTayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.
