It is clear that different monetary value and value theories have different consequence on pricing merchandises or services. For one thing, economic theory of pricing which is the Torahs of supply and demand, is sing as one of cardinal regulations to modulate the market economic system. For case, when supply addition, monetary values of trade goods may diminish. Similarly, if demand goes up, the monetary values of goods or services may increase every bit good. It seems that if there is a balance between supply and demand, the equilibrium merchandising monetary value between the monetary value and measure of trade goods in the economic system is the monetary value that fringy gross peers fringy cost ( Adam, 2009 ) . Therefore, in this state of affairs, organisations will non lose money. There is no uncertainty that supply and demand is cardinal factors make up one’s minding the monetary values of trade good, but other of import factors besides affect the pricing determinations such as accounting information.
On the other manus, it seems that there are some advantages and disadvantages for organisation when using the economic pricing theory to make pricing determinations. One of benefits of this theory is that organisation can respond the alterations of supply and demand in the market so that to do accommodation instantly. Take IBM as an illustration, IBM used the Torahs of supply and demand to work out the supply concatenation by offering on-line gross revenues and other services, which non merely assist to cut down costs such as saved $ 5.6 billion in2002, but besides assist IBM to do accommodations on its capacity so that to run into client ‘s demands, which lead the steadfast addition gross revenues gross and market portion ( IBM, n.d. ) . In contrary, there are some restrictions on using economic theory. First, organisation seems to be difficult on finding the fringy costs if end product degrees are different. For case, harmonizing to Neate ( 2012 ) , due to high demand of Apple Iphone5, the costs of air cargo which transport Iphone5 from China to the West, increased 7 % to $ 3.56 per kg during the launch period. It found it hard to gauge that the ‘huge ‘ air cargo costs will be occurred for Apple because Apple is difficult to foretell the end product degrees of Iphone5. In add-on, another disadvantage of economic theory is that demand may be influenced by other factors such as gustatory sensations and penchants of consumer. It is reported by Rosher ( 2012 ) that the demand of Samsung Galaxy S3 exceeds the expected demand due to the fact that new particular characteristics such as high quality 4.8 inch show attracted more clients, which leads to demand of Galaxy S3 addition dramatically. It seems that the ground Galaxy S3 has higher demand is because of its new maps, instead than the monetary values.
It is stated that economic pricing theory has different impacts on different people such as concern proprietors, employees and the populace. Harmonizing to Dowell ( 2012 ) , concern proprietors may concentrate on the Torahs of supply and demand because it shows the information such as how many people want a particular trade good ; how much of this peculiar trade good that client is willing to pay. Taking Apple as an illustration, it controls the supply of merchandises in order to do certain they have high demand. In add-on, it may act upon the rewards of employees and variable costs of concern. For case, if labour supply exceeds demand, the rewards rate of employees may diminish. Similarly, rewards of employees may increase if labour demand higher than supply ( Zias, 2012 ) . If rewards increase, that means organisation may pass more labour costs to employees, which means variable costs may increase. Furthermore, in footings of the populace such as clients, if demand of trade good addition, monetary value of trade good may increase every bit good, therefore clients may pass more on geting this trade good. However, for some luxury goods, if monetary values addition, clients may non be willing to buy.
For another thing, in footings of accounting theories of pricing, it is of import for monetary value takers and monetary value compositors to make up one’s mind monetary values of trade good in short-run and long-run. Harmonizing to Drury ( 2008, p.248-263 ) , organisations may utilizing different pricing schemes such as cost-plus pricing, mark costing and other accounting pricing techniques in such pricing skimming, incursion pricing and merchandise life rhythm to make up one’s mind the monetary values of trade goods. Price compositors and monetary value takers may hold different considerations when making pricing determinations. For case, in short-run, some excess costs of particular orders may happen such as excess parttime labour or excess stuff, those incremental cost should be considered for the monetary value puting house because the merchandising monetary values of trade goods should cover those fixed and variable costs and incremental costs. However, in footings of long period, monetary value compositors may prefer utilizing cost-plus pricing scheme such as full cost plus mark-ups in order to cover all costs that occurred during production procedure, but some seems to utilize mark bing attack to do pricing determinations which can cut down costs in the long-run ( Drury 2008, p.258-263 ) . It is evident that this theory may be utile to find selling monetary values of trade good due to the fact that it considers a batch different unsure factors such as cost, client profitableness analysis and so on, which possibly suited for organisation to utilize.
However, there are some benefits and restrictions by using accounting theories of pricing. For one thing, it is stated that demand may be ignored by utilizing cost-plus pricing scheme. For case, if $ 50 per fabric where the demand will be 80,000 units, but when the monetary value of cloth addition to $ 60, the demand lessening to 60, 000 units. Assuming that the variable costs of this fabric is $ 40, therefore, the entire gross revenues gross will be $ 800,000 at the monetary values of $ 50, whereas sale grosss of $ 1200, 000 at the monetary value of $ 60 ( Drury 2008, p.258 ) . In this state of affairs, it shows a incorrect determination which made by the company through this scheme. In add-on, some other disadvantages of cost-plus pricing such as under-costing or over-costing may act upon organisation whether make net income or non. In contrary, cost-plus pricing besides is a popular method that most companies use to find selling monetary value. Main ground is that it may assist to promote stabling the monetary value, which organisation can foretell other houses ‘ merchandising monetary value by utilizing this scheme. For case, if a house has an mean mark-up of 30 % in the yesteryear, it may be possible for other houses to calculate that the rivals besides may add a 30 % mark-up to their costs of trade good ( Drury 2008, p.259 ) . Firms can utilize different pricing schemes to find selling monetary values of trade goods in order to do net income.
For another, it seems that some organisations may utilize mark bing attack to find monetary value of trade good. It is good to assisting organisation able to run in profitable state of affairs in competitory market by be aftering and cut downing costs of merchandise ( IMA, 1994 ) . Take Ford as an illustration, it is stated by IMA ( 1994 ) that Ford used mark bing attack to vie with some Nipponese auto companies, which Ford spent much clip on making market research in order to understand the maps that clients want and the monetary value they accept so that to find monetary value of the new merchandise. Furthermore, it seems that non-customized high gross revenues volume merchandises are suited by using mark costing because it can pull off the cost of future merchandises ( Drury 2008, p.252-253 ) . However, the disadvantage of mark costing is that it may take organisation to pass big sum of money on researching informations from clients. For case, Ford may pass much money in making market research to offer the footing for finding merchandising monetary value, but it should do certain the monetary values cover all costs. Therefore, organisation should take this into history when using mark bing scheme.
On the other manus, concern proprietors, employees and the populace may hold different effects by using accounting pricing theory to make pricing determinations. For case, little concern proprietors may merely see whether monetary value of trade good cover all costs, which make certain profitableness on each merchandise whereas proprietors of big concern may see more factors on pricing their trade goods because they either need to vie with their challengers or do net incomes. Additionally, pricing schemes may act upon the labour costs of the company. For case, if company employed adept employees, house may necessitate to pay higher wage for those knowing employees. Besides that, for big houses, they may use professional selling directors to pricing their merchandises, which non merely to vie with company, but besides to maximise the net incomes. Furthermore, the populace such as consumers may compare the monetary value of trade good with other companies so to make up one’s mind whether to buy. Besides, higher selling monetary value may take to clients take viing trade good if both goods has similar quality. Therefore, when pricing trade good, organisations should see different factors such as clients ‘ willing and variable costs so that to do net income.
Furthermore, it is reported by Harvey ( 1999, p.1-38 ) that Marxist theory of value, which use value, exchange value and value will be reflected by utilizing trade good as stuff, but besides it embodies the societal dealingss between these constructs. For case, it is stated that usage value of trade goods can be generated by human wants and demands, if the merchandises or services can run into societal wants and needs, it mean the merchandises or services may hold usage value. Additionally, Marx stated that trade goods may hold exchange value except usage value, which the exchange of trade goods reflects the societal relationship with others such as labour procedure, labour clip or labour power behind the money, but besides merchandises can interchange in different manner harmonizing to the fetichism of trade goods. Besides that, the relationship between pay labour and capital is dominant in the capitalist manner of production ( Harvey 1999, p.22 ) . Taking labour power as an illustration, it acts as trade good that both has usage value and exchange value because labourers may through selling their labour power to exchange rewards. Furthermore, the value of theory by Marx non merely shows the societal dealingss between capital and labour, but besides the material foundation of capitalist development. For case, labour inputs non merely move as development, but besides supposed to lucubrate value of trade goods ( Harvey 1999, p.15-17 ) .
However, the disadvantage of Marx ‘s value theory is more refering on labour. Harmonizing to Tinker ( 1999 ) , Marx seems to pay attending on the labour “ theory ” of value to reflect the value of trade good and did non see other factors such as the regulations of market economic system and the efficiency of human activity. The factors in such labour power may be one of of import parts that embody the value of trade good. On the contrary, it is argued that Marx ‘s value theory seems to be successful to either reflect the category relation between pay labour and capital in the capitalist manner of production or through abstract labour, labour power to embody usage value, exchange value or value ( Harvey 1999, p.24-30 ) . For case, it is stated ( Capital, vol.1, p.586 cited in Harvey 1999, p.28 ) that gross revenues and purchases of labour power can be negotiated between peculiar persons. Therefore, single labourers can negotiated with capitalist to sell their labour power under conditions. They both have rights to protect themselves.
Without uncertainty that Marx ‘s value theory shows the of import dealingss between concern, community and employees. Harmonizing to Tinker ( 1999 ) , in the base on balls employees may sold their labour power in return to rewards while concern employed them to bring forth trade good. However, as clip goes, different degrees of labour in returns to different rewards rate. Skillful employees get higher wage than botchy people. Therefore, poorness may be caused in the unskilled and unemployed community, which led to those people migrate to some developing states such as China, India in order to do money and life. At present, workplace revolution occurred which the populace has the professional cognition in medical specialty, instruction, land accounting. Furthermore, policies such as Factory ‘s Acts modulate the organisation and labour and protect the rights of employees. Additionally, some jobs which the populace suffered such as cold intervention of adult females and environmental arrested development may hold solutions through authorities policies and organisation regulations ( Tinker 1999 ) . Therefore, public and employees, and concern value are of import and considerable comparative with each other.
In decision, it is undeniable that pricing determination is an of import issue for organisation because a just and right monetary value may pull clients that are willing to pass money on trade goods. However, economic pricing theory and accounting pricing theory gives different strengths and restrictions to organisation to find the monetary values of trade good and at the same clip, both pricing theories all have different impacts on concern proprietors, employees and the public such as variable costs, pay rates, consumers ‘ willing. For another thing, Marxist theory of value non merely reflect the usage value and exchange value or value by trade good, but besides show the societal and labour power relationship between these constructs. Furthermore, proprietors of concern, employees and the public have different influences on Marx ‘s value theory such as labour protection. To sum up, organisations should pay attending on pricing or value trade good when using different pricing and value theory.
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