The basics of Price Analysis and its reflection in the

A cost-benefit analysis is a study of the return, not only financial of our investments, but also of social and environmental aspects of what the project has some or all influence.

The data analysis is at its best. We live in the era of analytics, a large part of our decisions are based on the results we obtain daily. Possible scenarios, market studies, business plans, results graphs. Each time we have more reasons and resources with which to achieve an effective quantification of social and economic consequences of our work. In this context, a good pricing strategy can be decisive for the success of an e-commerce.

Therefore, the Price Analysis is essential for decision-making of any company, organization or institution. Determine the feasibility of a project. During its planning the costs and benefits derived directly or indirectly from it are evaluated. Is it worth starting this project? Or, a question that should make many project managers today still not makes: should we continue with the project? Because the cost – benefit analysis is performed not only in the beginning phase, but also during each milestone it.

A subsequent and previous cost benefit analysis is performed. It is contrasted and the right decision is made.

How to do a cost-benefit analysis?

According to the cost benefit analysis, a project will be profitable when the cost-benefit ratio is greater than unity.

To continue with the analysis, it is convenient to use a cost management tool and keep in mind the different phases:

  • Identification of collections and payments at market price.
  • Corrections for transfers, where we will take into account the tax nature and subsidies and public transfers.
  • External costs and benefits that have not been taken into account. This step is one of the most complicated, because it is often almost impossible to attribute a monetary value to the environmental impact of a given project.
  • Determination of ‘shadow prices’, or social costs and benefits. The specifications of our project are transformed, such as tariff barriers or labor with determined salaries, outside market prices. It represents the opportunity cost of producing or consuming a good or product.
  • Social discount rate, in which we will determine the moment in which we will check the minimum profitability of a project. Since not all consumer products have an immediate satisfaction. Some, only after a while begin to give social and economic benefits.

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