Cost Price

Cost Price

In a business situation, the price paid by a vendor to acquire an item to offer for sale.

The cost price represents the sum of the costs incurred for the production and distribution of a good or service. Determining the cost price is essential to avoid selling at a loss.


The purchase price of a book acquired by a bookstore is $12. Therefore, the bookstore must sell this book for a price that is greater than or equal to $12, or else it will sell it at a loss. To this cost, it must add a part of the administrative fees necessary to run the bookstore. The sum of these costs provides the cost price. The bookstore must also add the profit that it hopes to obtain; this will give it the sale price.

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