The term costing and pricing is important in the case of purchase departments, production department, logistic department, stores, distribution channels, marketing division and even in accounts and IT department. The purchase department is very particular about the quality of the raw materials or other products including capital goods. At the same time, they have to consider the cost associated with the yield in finished goods. There are so many options to reduce the procurement cost. The raw material mix, process costs time, normal loss and minimization of process time etc. can also be done with the help of costing and pricing.
Costing department can view the existing or proposed distribution channel, scope for expansion, logistic cost, handling cost, etc. and it can be minimized. Alternative option can also be evaluated. These days, employee productivity is a challenge, mostly, it is the outcome of employee turnover. A good costing system can identify loyal employees, motivate them by salary, perks and other incentives. People at accounts department is also playing a greater role in survival of business units. The capital budgeting etc are the outcome of costing and pricing. The other departments such as ERP, data analysis and AI is also required the services of costing and pricing department for its 100% productivity.
Whether an enterprise is to exist or not in a competitive environment, may be the efficiency of its costing & pricing. In competitive environment, the gross profit margin is a challenge. We have to minimize the cost to the maximum. Evaluation of innovation in product or services is complete only if there exist an effective costing system. On the same line the development or improvement of products or services are also effective if supported by costing division. Limit our expenses proportionate to revenue also requires costing system. In olden days, cost plus profit was the formula for fixing price. Time changed. Quality associate with saving of cost are the formula for price. In differentiation also costing performed a greater role. Aspire foundation strongly recommends a costing system with medium enterprises and above.
ASPIRE FOUNDATION is competent to support any institution, in start up stage or growth stage, for their costing and pricing functions.