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/
Connect with us!
YouTube ► https://www.youtube.com/channel/UChlNXSK2tC9SJ2Fhhb2kOUw
LinkedIn ► https://www.linkedin.com/company/wallstreetmojo
Facebook ► https://www.facebook.com/wallstreetmojo
Instagram ► https://www.instagram.com/wallstreetmojoofficial/
Twitter ► https://twitter.com/wallstreetmojo