Cost vs. Price: What's the Difference?
Edited by Harlon Moss || By Janet White || Published on November 29, 2023
Cost refers to the expenditure involved in making a product, while price is the amount a consumer pays for it.
Key Differences
When discussing financial transactions, the terms "cost" and "price" have distinct meanings. Cost pertains to the amount of money, time, or resources expended to produce or acquire something. It is the investment made by businesses to bring a product or service to the market.
On the other hand, price is the monetary value at which a product or service is offered for sale to customers. It's the amount that consumers are expected to pay in exchange for the item or service. Price often includes not only the cost but also a profit margin.
To put it in practical terms, imagine a company manufacturing a shirt. The cost involves the expenses for materials, labor, and overheads. This cost represents the minimum amount the company would need to cover to break even.
Conversely, the price is what you, as a consumer, pay when you purchase that shirt from a store. This price will typically be higher than the cost, as it includes the retailer's markup, which accounts for their profit, overheads, and other factors. Thus, while cost and price are interconnected, they denote different financial concepts.
Comparison Chart
Definition
Expenditure to produce/acquire an item
Amount paid by the consumer for an item
ADVERTISEMENT
Perspective
Producer's/Manufacturer's
Consumer's/Buyer's
Components
Materials, labor, overheads, etc.
Cost + Profit + Taxes + Other charges
Purpose
Determines break-even point
Generates revenue and profit
Flexibility
Often fixed but can vary based on efficiencies
Can be adjusted based on market demand and strategy
Cost and Price Definitions
Cost
The expenditure incurred to produce an item.
The cost of producing the book included printing and binding expenses.
ADVERTISEMENT
Price
The sum of money expected, required, or given.
The antique's price was non-negotiable.
Cost
The amount paid to acquire resources.
The cost of the machinery was $10,000.
Price
The amount charged for a product or service.
The price of the dress is $50.
Cost
The sacrifice made to achieve something.
The cost of success often involves long hours and dedication.
Price
A measure of what is given up in exchange for something.
The price of freedom is eternal vigilance.
Cost
A measure of the effort or loss involved.
The environmental cost of deforestation is significant.
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
Price
The monetary value attached to something.
The price of gold fluctuates daily.
Cost
The economic value of resources used.
The project's cost exceeded its budget.
Price
The rate or tariff set for services.
The price for the consultant's input was steep.
FAQs
Why might a company absorb additional costs without raising prices?
To maintain competitiveness, customer loyalty, or market share.
Can the price be lower than the cost?
Yes, sometimes items are sold at a loss to clear stock or gain market share.
What factors contribute to the cost of a product?
Materials, labor, overheads, and sometimes marketing and R&D contribute to the cost.
Why do some brands have similar costs but different prices?
Brand value, positioning, perceived quality, and marketing can influence price.
How is the price of an item determined?
Price is based on cost, profit margin, market demand, competition, and other factors.
Can economies of scale reduce cost?
Yes, producing in larger quantities often reduces the per-unit cost.
What's the difference between selling price and cost price?
Cost price is the expenditure to produce/buy, while selling price is what customers pay.
Is cost always monetary?
No, cost can also refer to time, effort, or other sacrifices.
How do discounts affect the price?
Discounts reduce the final price a consumer pays.
How does inflation impact cost and price?
Inflation can increase both the cost of production and the final price to consumers.
Can a product's cost change over time?
Yes, due to factors like resource scarcity, technology, or efficiency improvements.
What is 'price elasticity'?
It's a measure of how demand changes in response to a change in price.
Why might two stores have different prices for the same product?
Location, overheads, target market, and competitive strategies can affect price.
What is the "opportunity cost"?
It's the value of the next best alternative foregone when making a decision.
Is the price always a reflection of quality?
Not always; price can be influenced by branding, marketing, and other non-quality factors.
What's the difference between fixed and variable costs?
Fixed costs remain constant regardless of production, while variable costs change with output.
How is "marginal cost" different from "total cost"?
Marginal cost is the cost of producing one additional unit, while total cost is the entire expenditure for all units.
How do taxes influence the price?
Taxes can increase the final price if passed on to consumers.
How do sales promotions affect price?
Sales promotions often temporarily reduce the price to boost sales.
Why might a company price a new product very low?
To penetrate the market, gain customers, or outcompete rivals, even if it doesn't cover the cost initially.
About Author
Written by
Janet WhiteJanet White has been an esteemed writer and blogger for Difference Wiki. Holding a Master's degree in Science and Medical Journalism from the prestigious Boston University, she has consistently demonstrated her expertise and passion for her field. When she's not immersed in her work, Janet relishes her time exercising, delving into a good book, and cherishing moments with friends and family.
Edited by
Harlon MossHarlon is a seasoned quality moderator and accomplished content writer for Difference Wiki. An alumnus of the prestigious University of California, he earned his degree in Computer Science. Leveraging his academic background, Harlon brings a meticulous and informed perspective to his work, ensuring content accuracy and excellence.
