Price or cost?

Price or cost?

Starting with their use as nouns, here is a short definition of each word:

Price – the amount of money we pay for something.

Cost – the amount of money we need to produce something.

So, let’s say we make a cushion, then we can calculate its cost by thinking about the materials we used and the time we spent making it.

If we want to sell the cushion, the price would be the amount that we ask someone to pay for it.

(If the price is higher than the cost, the difference would be our “profit”, but if the price is lower than the cost, the difference would be our “loss”. If the price and cost are the same, we would “break even”).

There might be many things to include in calculating the cost – such as materials, labour, manufacturing, packaging, marketing, and distribution.

Everything has a cost, not only things that are made. Calculating the cost of such things as fruit, vegetables, plants and flowers might have to consider land, farming, equipment and transport. For services such as banking, factors might include such things as expertise, experience, premises, stationery, telephones and internet. 

In everyday speech, it sometimes doesn’t matter whether we use “price” or “cost”. The two words are often interchangeable. We might, for example say: “I can’t afford the price of a cup of coffee” or “I can’t afford the cost of a cup of coffee”. “Price” is probably more correct but both versions are acceptable.

There are certain expressions where it is usual to use a particular word. For example:

• Cost of living
• Rising costs
• Included at no extra cost
• The total cost
• Cost cutting
• Price in the shops
• He knows the price of everything but the value of nothing
• House prices
• The price of freedom
• Fixed price

“Price” and “cost” can both be used as verbs. In this case they are not interchangeable.

Here are some examples of how we use “price” as a verb:

• He prices the items very carefully. Meaning that he takes care in deciding the prices.
• It is priced beyond my means. Meaning that the price is too high for me.

And some examples of “cost” being used as a verb:

• It costs 50 dollars. Meaning that the price is 50 dollars.
• It doesn’t cost very much.
• It’s going to cost me a lot of money.
• I’ve costed it in great detail. Meaning that I have calculated the cost.

^{Posted by Graham}