Difference in Price and Cost ?

What is difference between Price and Cost ?

Yes there is a different between price and cost.

Cost is the amount of money which is spends on a product to produce or manufacture. For example if a manufacturing company is producing cars, the cost incurred on the car may include its body parts, wind screen, engine, seats, rubber items, wires, lights and labor cost. When we add theses expenses we are able to calculate the cost of that car.

Price is the amount of money which includes cost plus profit.

Price = Cost + Profit

So the offered money against which, we are going to purchase some product is known as price. We can take same example over here, that the sum of all expenses incurred on the car is become the total cost of the car. Let’s say total cost of a car is 100,000. Now company may sell this car at the price of 150,000. Now we can write it as;

150,000 = 100,000+50,000

Price = Cost + Profit