What is the difference between Price and Cost?

Price and cost are frequently used when sales in discussed. The term “price” and “cost” is not the same but many people use them interchangeably. Price is the amount of money an individual will pay to acquire a product or service. Price is the anticipated income expected from a service or product.

Cost is the amount paid to produce a service or a product before it is sold. It simply is the amount the seller used to produce the said product. Cost may include: bills, materials, salaries and wages of employees. Cost comes before price and it is lower than price.

The cost is known to be the expense that is related to a particular product or service. This signifies the amount that needs to be spent to produce or to market a product or service that will be offered to various customers. The price is the amount of the product or service that people are willing to spend on. As a customer, you will usually look at the cost of the item first before you would decide if you are going to purchase it or not.

If you have a lot of money to spend, you will not care too much about the price, but you may want to think about the cost of maintaining that product.