Transfer pricing (Ch.20)
... Cost-plus method: adds an app. Profit markup to the sellers’ cost to arrive an an
arms-length price. Ths method is useful in specific situations, as when
semifinished products are sold between related parties or one entity is essentially
acting as a subcontractor for a related entity.
The global nature of business means transfer
... imposing tax based on sales in a country has
a number of major potential problems. In the
EU, VAT operates as a sales tax, and the EU
treaty forbids individual countries from imposing
additional sales taxes. Basing a tax on sales
would give rise to winners and losers at country
level: major capital ...
Transfer Pricing in Korea
... 4-0…2【Deductibility of Management Services Fees Remitted to a Foreign Parent Company】
① Previously, a foreign parent company and its Korean subsidiary were regarded as separate entities,
accordingly, head office expenses allocated to the subsidiary were unlikely to be regarded as taxdeductible expen ...
Pick a Price, Any Price
... Determining an exchange price. When a good or service is sold, the buyers and sellers have agreed on a value for
the product. That initial value is usually stated as a monetary
amount, such as $39.99. At this point, the buyer has decided
that s/he is willing and able to pay that amount of money
to o ...
Internal Factors to Consider in Pricing
... The Learning Curve and Pricing
• As people do the same thing over and over
they do it faster and with less mistakes. This
is known as the learning curve.
• Companies which make a lot of a product
tend to have variable cost advantages.
• In addition, companies which make a lot of a
product have low ...
Ind. 5.01 * Develop a foundational knowledge of pricing to
... Being Realistic – neither too high or too low
Being Flexible – adjustments may be increases or decrease,
depending on the circumstances the business faces
Being Competitive – when similar products are offered by your
competition, you must be aware of the price they are charging
... How do you navigate it all?!
Pricing Products: Pricing Considerations and Approaches
... Price Floor Cost Considerations
Types of Mark-Up Pricing
o Cost-plus pricing - a pricing method in which the producer (seller) determines its costs and then adds
a specified profit amount or percentage to the selling price.
o Break-even Analysis & Target Profit Pricing – setting price to break even ...
Pricing Techniques - St Aloysius` College
... Important factors include the following:
Price of competitors’ products;
Quality of product;
Cost of materials and labour used;
Type of market. e.g. Luxury products such
as perfume will charge high prices, which
are not an indication of the cost of
... Psychological Pricing based on the theory that certain prices have a psychological impact.
Retail prices are often expressed as "odd prices"
Consumers tend to perceive “odd prices” as being significantly lower than they actually are
prices such as $1.99 are associated with spending $1 rather than $2 ...
Chapter 11 Section 1 Notes
... a. Cost Based
-Must consider your businesses costs and your profit goals.
-To Calculate: Price = Cost to Make the Product + Related Costs of doing business+
Projected Profit Margin(Markup)
b. Demand Based
-Find out what customers are willing to pay
-Set price accordingly (Useful only when certain co ...
Making Cents of Pricing Build business cases to enhance the bottom
... management all of the relevant marketing
issues that affect costs and profitability
before designing the study
How do I ensure that my pricing decisions will
support the overall long-term positioning of my
How do I determine the specific benefits for
which customers are willing to pay m ...
The Retail Price
... vendor pricing method manufacture or wholesaler
determine the retail price. Vendors can suggest
prices by providing a pricing list, printing the price
and with the help of detail information.
Retailer is not required to use suggested retail price,
but many retailers believe it represents a fair
Marketings definīca + 4 p
... Purchases of other items more than covers
‘loss’ on item sold
e.g. ‘Free’ mobile phone when taking on contract
... Example: A supply shock is a sudden shortage of a good, such as gasoline. A supply shock
creates a shortage because suppliers can no longer meet consumer demand. The immediate
problem is how to divide up the available supply among consumers.
Rationing is a system of allocating goods and services usi ...
... Costs & Expenses
Supply and Demand
Price gouging: price above mkt. when there is no
Price fixing: illegal; competing companies agree to restrict
prices in a specified range
Resale Price Maintenance: price ...
... PRICING DECISIONS
November 7, 1997
Transfer pricing is the setting of the price for goods and services sold between controlled (or related) legal entities within an enterprise. For example, if a subsidiary company sells goods to a parent company, the cost of those goods is the transfer price. Legal entities considered under the control of a single corporation include branches and companies that are wholly or majority owned ultimately by the parent corporation. Certain jurisdictions consider entities to be under common control if they share family members on their boards of directors. It can be used as a profit allocation method to attribute a multinational corporation's net profit (or loss) before tax to countries where it does business. Transfer pricing results in the setting of prices among divisions within an enterprise.In principle a transfer price should match either what the seller would charge an independent, arm's length customer, or what the buyer would pay an independent, arm's length supplier. While unrealistic transfer prices do not affect the overall enterprise directly, they become a concern when they are misused to lower profits in a division of an enterprise that is located in a country that levies high taxes and raise profits in a country that is a tax haven that levies no or low taxes. Transfer pricing is the major tool for corporate tax avoidance also referred to as Base Erosion and Profit Shifting (BEPS).