[AccessD] OT: Pricing Method ?

Stuart,
 Thank You Very Much! 

Robert

-----Original Message-----
From: accessd-bounces at databaseadvisors.com
[mailto:accessd-bounces at databaseadvisors.com] On Behalf Of Stuart McLachlan
Sent: Saturday, November 04, 2006 4:34 PM
To: Access Developers discussion and problem solving
Subject: Re: [AccessD] OT: Pricing Method ?

Jim gave you a very good exposition of the vatious ways of establishing
markup. Then one part he skipped over was what cost price to use.

There are several different ways of determining cost price. Which price is
used is determined  by why it is being used and/or who is using it. 
The most common "Cost" prices are:

Last/Replacement cost.    
Gives you  an  indication of what it is going to cost you to replace your
current stock when you use/sell it. Good for planners/managers.  Not used
very often for determining prices/margins. Simple to implement CurrentCost =
NewCost

Average Cost.    
Tells you how much you have paid in total for your current stock and gives a
reasonable indication of  unit costs to work out margins etc and whether you
are making a profit in the business. Commonly used for determining 
prices/margins.   Good for accountants. A bit more complex to implement.
((CurrentStockOnHand * CurrentCost) 
+ (NewStockQty * NewCost))
/ (CurrentStockOnHand + NewStockQty) 

First In First Out (FIFO) Item Cost Tells you exactly what each item of
stock cost you. Favoured by anal retentive accountants and auditors. 
Complicated to implement. You need to keep either a date/qty/cost table for
each item or.  Every time an item is consumed, you need to check
QuantityOnHand or keep track of a pointer into this table to work out when
it was purchased and therefore what it cost.  

Actual Cost.    You store the individual cost against each item, not 
against each item type. It is only useful if you can identify individual
items when they are bought/sold. 
Used for pricing/margins  when dealing with low volume/big ticket items and
accountable items such as aircraft spares etc.  


On 4 Nov 2006 at 10:15, Robert wrote:

> 
> 
> This is probably a stupid question but.....
> 
> When calculating the selling price of an item, say by margin, do you 
> calculate based on the current received cost, or does one take the 
> average cost (of previously received items) + the current price and 
> then perform the calculations?
> 
> Total = AverageCost / (1 - m_dMargin)
> 
> Or say
> 
> Total = RecievedCost / (1 - m_dMargin)
> 
> 
> Another question....
> 
> What do you think is the best method of pricing an item in a Service 
> Oriented business. The business would sell both labor and components..
> 
> 
> Thanks
> Robert
> 
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--
Stuart


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