The seller must also evaluate factors to identify the economic price that will serve as the selling price.
An economic price is a price that includes all expenses associated with the purchase. Sometimes known as full price, this form of sales price will allow for any and all direct costs associated with the transaction, taking into account any indirect costs that may apply. To some extent, the economic price will also include consideration of any opportunity costs that the buyer and seller may incur as a result of choosing to complete the proposed transaction.
It is important to understand all the factors involved before determining the selling price which also represents the economic price. For the buyer, this means having a clear understanding of what kinds of expenses are associated with the purchase and deciding which of those expenses are included in that price. While direct expenses are often obvious, it may take extra effort to identify hidden costs, as well as direct costs that have some bearing on the purchase price. Knowing these factors, as well as considering what the buyer must give up to make the purchase, makes it easier to decide if the transaction is in that buyer’s best interest.
The seller must also evaluate each of these factors to identify the economic price that will serve as the selling price. This includes taking into account the direct and indirect costs incurred as part of the process of selling the good or service, as well as providing customer service once the purchase is complete. Here, the opportunity cost factor is also important to the salesperson, as he must decide whether the opportunities to be missed to do business with a particular customer are really worthwhile in both the short and long term.
Understanding all the considerations that go into an affordable price is important for everyone involved. This makes it easier to identify the potential benefits and liabilities of completing the transaction and ultimately decide which course of action is the most advantageous path. In some cases, the accurate assessment of the economic price and the reasons behind that price opens the door to negotiation between a buyer and a seller, with the possibility of arriving at an alternative price that still serves the purposes of both parties. Unless both parties perceive the transaction to be beneficial, it is likely that one or both parties will move on and look for other opportunities with greater potential to produce the desired results.