The main objective of the company is to make profit. Cost analysis allows insight into the effectiveness of the company's management, and in prospect - for its improvement by establishing ways to reduce costs.

Analysis of the production costs includes analysis of total costs, average costs, unit costs, marginal costs, fixed costs and variable costs. All costs are related to each other and analyzed in both the short and long-term. Analysis of the cost structure allows to know how, in fact, the company functions.

Cost analysis and price research consist of the following modules:

  • cost-profit analysis,
  • studies of price elasticity,
  • analysis of the demand, determining potential of the market and sales, forecasting sales,
  • analysis of price competitiveness.

Costs can be divided by reason of:

  • type: depreciation, materials and energy, taxes and fees, salaries, social security and other benefits, other expenses;
  • sphere of activity: purchase costs phase (supply), cost of sales phases (sales), general and administrative expenses (General Works), the costs of the specific activity;
  • function: direct and indirect costs;
  • relation of costs on the level of the batch size: fixed and variable costs;
  • place of origin: costs of the departments and overhead costs.

In order to determine pricing strategy, a pricing poll is taken.

Methods of price survey:

  • PSM (Price Sensitivity Meter) - analysis of price sensibility, i.e. study of price elasticity;
  • DPA (Direct Price Acceptance) - assessing the direct acceptable price;
  • BPTO (Brand Price Trade-Off) - study of the demand price elasticity, checking various price variations;
  • Demand Two - testing the predefined product price by asking about the likelihood of purchase;
  • Statistic methods - price ratio, aggregate price ratio, consumer price index, aggregate price index, base-weighted and non-weighted indices, Laspeyres price index, Paasche price index, blended index.