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What is Shadow Pricing? (How it Works?) [Video]

What is Shadow Pricing? (How it Works?)

In this video tutorial, we discuss what is Shadow Pricing, how it works, its need along with its advantages and disadvantages.

What is Shadow Pricing?
Shadow pricing is a technique of assigning a specific price to an item commodity or service that is not bought or sold in any marketplace. Instead, the prices are set based on subjective assumptions.

Needs for shadow pricing?
– Required for calculating the opportunity cost
– Helps in making certain decisions
– Estimate the costs and benefits of society.

Advantages of shadow pricing
– Helps in making proactive decisions
– Consider the economic opportunity cost
– Helps in comparison
– It prevents underpricing
– Suitable for monetary calculations

Disadvantages of shadow pricing
– Pricing is entirely based on subjective assumptions.
– It doesn’t have any proof.
– May lead to a wrong decision.
– High chance of inaccurate estimates.
– Suitable for deciding on the short run.

For more details, you can refer to our article –
https://www.wallstreetmojo.com/shadow-pricing/

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