Once you know how much our product costs then you must determine the price. The key goal is to make profit in your business so it important to know to price of your products correctly. In order to have a robust pricing you must know the extraneous factors that affect the pricing such as custom duties, shipping charges etc. Valuation is of different types such as valuation of a bankrupt company, valuation of a startup, valuation of mines, valuation of properties, valuation of intangible assets such as copyrights, license, trade secrets etc. Accurate valuation can have a significant impact on the growth of a business.
During pricing it important to research the amount competitors are charging for a particular. It is an effective way to know the current market price. By the same token one should not follow the pricing set by the competitor. For example, if the price set by the competitor is lower than your cost, you do not want to adopt that same price because in that case your business will suffer loss. Keeping your cost in mind you may want to offer a price that is lower than your competitors but don’t be too cheap as your customers may then become suspicious of the quality of your product. Sometimes inventories are experience costing on First-In, First-Out basis. According to this the stock that is registered oldest in the inventory is sold first and it contributes to the profit of the business. Alternatively in the Last-In, First-Out method of costing the newest item registered in the inventory is the first to get sold. This last registered product contributes to the profit. Moving average cost is another effective method for valuation. In this method the total cost of the stock in the inventory is divided by the number of items in the stock.
As life members of the Institution of Valuers and of Institution of Engineer Avante is well versed in the intricacies of costing and valuation. Costing is determined in a logical manner in keeping with the norms and principles. Valuation or present values of different assets are determined by chartered engineers, who also issue certificates.