The Cost Composition and Change Law of Carton Price (I)

Carton price costs and changes

(I) Value Costs and Composition

Price is a variable, which is influenced and restricted by many factors. When the commodity is priced, it is necessary to analyze these factors first, and to understand their relationship with prices. Based on this, appropriate pricing methods and pricing strategies are selected. Let’s look at prices and costs from the perspective of price strategies:

1. Commodity prices are the currency performance of commodity values, and therefore commodity value is the basis for price formation. Under normal circumstances, the level of commodity prices is proportional to the size of commodity value. However, due to the law of supply and demand and the laws of competition, the market price of an enterprise’s products is usually determined by the average price of similar products, and the average market price is often deviated from the value of goods (or production price). It is also this kind of "deviation" that not only brings difficulties to the pricing of enterprise products, but also provides opportunities for enterprises to flexibly formulate and adjust prices according to changes in the marketing environment.

2. Carton costs include manufacturing costs and marketing costs, etc. It is one of the most basic and important factors in price formation and the minimum price for carton pricing. Carton prices must be able to compensate for all production and marketing expenditures, and to compensate for the cost of the product to bear the risk of the product. Carton costs can be divided into fixed and variable costs. (1) The fixed cost refers to the costs and expenses that do not increase or decrease with the increase or decrease of the output and sales volume within a certain limit and have relatively fixed nature, such as the depreciation of fixed assets, hydropower and steam, new product development fees, and market research fees. , office expenses, etc.; (2) variable costs are the various costs that increase or decrease with the increase or decrease in output or sales volume, such as raw material consumption, storage and transportation costs, manufacturing expenses, taxes and fees. The sum of the two is the total cost of the carton and constitutes the lower limit of the carton pricing.

3. Corporate profits are the difference between prices and costs, so companies must understand the changes in costs, save all unnecessary consumption, and strive to reduce costs in order to reduce prices, obtain competitive advantage, and achieve the company's marketing goals.

(II) The law of price and supply and demand changes

1. Supply and demand affect prices. On the other hand, prices affect supply and demand. Changes in prices cause changes in supply and demand, and further affect the realization of corporate marketing goals. The degree of price impact on supply and demand can be reflected by the price elasticity of supply and demand.

(1) Price elasticity of supply The abbreviation of supply elasticity refers to the extent to which the supply of a product reflects the change in price. The size of the elasticity can be expressed by the elasticity of supply. The elasticity of supply is equal to the ratio of the change in supply to the percentage change in price. Its ratio is greater than 1, equal to 1, less than 1, infinity, and equal to zero five conditions, respectively, indicating that the supply is flexible, unit elastic, inelastic, infinite elastic, and completely inelastic. One of the most common is the supply of flexible products. If the price is too high, it is easy to stimulate competitors to join, and the supply of inelastic products is suitable for high prices.

(2) The price elasticity of demand, referred to as demand elasticity and cross elasticity, refers to the extent to which the demand of a product reflects the change of its own price, and its size can be expressed by the demand elasticity coefficient. The elasticity of demand equals the ratio of the percentage change in demand to the percentage change in price. The ratios are also greater than 1, equal to 1, less than 1, infinity, and equal to zero. These represent demand elasticity, unit elasticity, lack of elasticity, infinite elasticity, and total elasticity, respectively. For products with flexible demand, it is advisable to stimulate low prices to stimulate end-users. Through small profits and quick sales, corporate profits are still considerable. However, for products with inelastic demand, when market demand is strong, they can increase prices or increase prices appropriately. The value of the product, but also increase profits.

2. The supply and demand mechanism in the market mechanism is the change law that reflects the interaction of market supply and demand and price. Therefore, studying the relationship between supply and demand of cartons and their changing trends has a positive guiding significance for the pricing of enterprises. In a certain period of time, the supply and demand situation of the carton manifests itself in three forms: supply and demand balance, supply shortage and supply exceeding demand. The balance between supply and demand is a balanced output, and the sales price is a balanced price. However, this equilibrium is often temporary, and the imbalance between supply and demand is common. When supply exceeds demand, a buyer’s market is formed and the buyer controls Market initiative, carton manufacturers competing for customers and sales, at this time should be based on their own product conditions and timely adjustment of prices in order to be invincible. Conversely, once the seller’s market is formed, it is imperative that the cartons’ prices be properly increased.

(to be continued)