Supply can be influenced by a number of factors that are termed as determinants of supply. Compression and extrusion molding are typically less expensive than injection molding, which is used for more intricate items and requires construction of an injection tool. Similarly, the process you choose for making your product directly affects the cost of your project. Obviously, prices can shift — sometimes significantly, and often due to currency fluctuation — and can affect the price you were originally quoted. hbspt.cta._relativeUrls=true;hbspt.cta.load(397539, '5ae48ec2-d081-4730-9216-a93d6595fd51', {}); Filed Under: The cost of raw materials is almost constantly in flux, and this is due to the intersection and overlap of many different factors. (iii) Has the firm to produce the raw materials itself or should it depend upon other firms? Nearness of the market ensures transportation cost less and minimum wastage. How your artwork is developed and delivered has a big impact on price. 10.79, Rs. All Rights Reserved. Privacy Policy3. | Privacy Policy, 6 Factors That Influence Manufacturing Costs. For example, let’s say you want to make a plastic part. But, it can be increased up to the optimum level. It’s a fundamental economic principle, the more people want an item, the more it will cost to purchase it. On the basis of further experience the plan may be revised from time to time in deciding about the scope. Key Takeaways Factors of production is an economic term that describes the inputs used in the production of goods or services in order to make … 1. Share Your is the home of thousands of essays published by experts like you! The final cost of past project needs to be factored with current construction cost indices. If your product requires special testing for a necessary certification, the cost of that testing is included in the price quoted. Published by Experts. The Utility and Demand 3. Pricing. The same thing is true for every other commodity. Lower costs could be due to lower wages, lower raw material costs For the construction estimate, the best reference will be similar construction projects. This website includes study notes, research papers, essays, articles and other allied information submitted by visitors like YOU. The variables such as labour, feed, cost of veterinary medicine, and fixed costs are the factors that determine the profitability of dairy farming. When the cost of the factors of production like labor, raw materials, and machinery increases, view the full answer Previous question Next question Get more help from Chegg But the reality is, there are several factors affecting a final cost price, and the manufacturer needs to take all of these into account before they can give you a realistic price. That’s the principle keeping buyer’s warehouses in business. Supply and general availability is often the most important, and concerns how easy it is to get a hold of the material and how much of it there is in any given place. There should be an easy approach to the place of raw materials. In that case, your manufacturer might look for alternate suppliers or even alternate materials. (i) What techniques have to be followed in production? fundamental price deciding factor for anything in this world is the law of demand-supply. A supply schedule is a table which shows how much one or more firms will be willing to supply at particular prices under the existing circumstances. Changes in the cost of inputs, natural disasters, new technologies, taxes, subsidies, and government regulation all affect the cost of production. The design and tooling process adds considerably to the initial cost. Many factors influence electricity prices. If the prices of these factors rise, the total cost of production goes up reducing profits. Customers are often willing to pay more up front to gain savings over time. TOS4. Fluctuation in currency exchange rate-The production of basic components requires importation of some materials, in time of downfall in naira to dollar, we can see the effect in the immediate 100% rise in price of cement and other materials. Due to factors such as labour rates, energy costs and infrastructure, the location of your factory can make a big difference to your prices. So basically if you’re planning for a content that is having a very big budget, for example, going to two, three cities or covering up two, three places in the same city. That’s your best starting point as you make your way through the product development and manufacturing process. Size A complete analysis of these factors, will certainly help the entrepreneur to earn maximum profits by reducing the costs. New technology which improves output per worker enables the firm to cut back on employing workers,... Exchange rate. Land 2. Product Cost: The most important factor affecting the price of a … The size of the firm should be optimum as to ensure maximum profitability. was tabulated and a frontier computer package was used to find the significant factors of milk production. The success of the new enterprise very much rests on the selection of suitable site. Die casting requires a heavy capital investment — purchasing casting equipment and making the metal die. Factors affecting cost of Construction. However, if there are more folks looking to purchase copper than there is copper, that material will cost you a pretty penny. What are Chain Elongation and Chain Termination? – Explained! You want the assurance that your manufacturer is looking out for you. The place selected should be such where the raw materials are available easily. Starting point as factors affecting cost of production make your way through the product in the factory itself for... 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