APPLY PRINCIPLES OF COSTING AND PRICING TO A BUSINESS VENTURE

This program is for learners who are required to apply the principles of costing and pricing in determining profit margins for a new venture. The Unit Standard will assist the learner in determining the future profitability by establishing whether the costs involved will generate sufficient profit to justify the launching of the new venture.

Unit 1: Explain the criteria of a price-setting policy for a new venture.

• The flow of the trading cycle is explained and illustrated for a new venture.
• The concepts of costing and pricing are differentiated in terms of a product or service.
• The difference between fixed costs, variable costs and total costs are explained in the context of own venture.

Unit 2: Analyse internal and external factors that impact pricing decisions.

• The internal factors impacting pricing decisions are identified and discussed in relation to the profitability of own venture. 

• The external factors impacting pricing decisions are identified and discussed in relation to the profitability of own venture.
• The business activity levels are recognised and specified in terms of their limitations.
• Variations in pricing decisions are to be calculated in terms of the impact on the break-even point. 

Unit 3: Demonstrate an understanding of the relationship between costs, revenue and profits. 

• Available costing methods are reviewed in relation to own business.
• Profit mark-up is calculated and analysed for own business.
• A distinction between types of profit is made in relation to own business venture.
• Competitive pricing is investigated and compared to inform effective costing and forecasting of operating a business.