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net & effective price

Former Member
0 Kudos
95

Dear all,

Effective price = net price + freight

1. Is Taxes inclusive or exclusive of net price...kindly explain

and also

2. Total price = basic price + discount + frieght cost

Is basic price means Grossprice?

kindly provide your feedback

tks

Accepted Solutions (1)

Accepted Solutions (1)

former_member192897
Active Contributor
0 Kudos

Hi Kali,

Effective Price means the price which comes after deducting discount.

And Net price means the Price included all taxes & Frieghts.

Effective Price = Gross Price - Discount Price

Net Price = Effective Price + Taxes + Frieghts.

Reg,

Ashok

  • Assign points if useful.

Former Member
0 Kudos

Tks mr.keshav

NET PRICE

Price with Discounts and Surcharges, which include taxes...

EFFECTIVE PRICE

NET PRICE + Transportation Charges...[freight]

my final query is taxes included in net price or not...when i search the forum the answers are contradictory

kindly advise pls

tks

kali

Former Member
0 Kudos

Hey Keshav,

I would suggest you to take a look at any financial document like a P&L sheet. It will always show the Gross Profit before deduction of any Taxes or Dividents. Subsequently, it is shown as Net Profit.

My explanation comes from this logic.

Hope it helps you.

Cheers

Keshav

Former Member
0 Kudos

Hello Kali,

Non deductable taxes are used while calculating effective price of the material and not during calculation of net price.

Nikhil

Answers (5)

Answers (5)

Former Member
0 Kudos

Hi Kali,

Your problem is only the close meaning of all the English words here. I will try to put forth my understanding of these words to help you.

Basic cost

Less: Discount (if any)

Add: Freight

Add: Taxes

-


Gross Price

-


Less: Non-inventorised protion of Taxes (like CVD credit in India)

Less: Discount (if any)

-


Net Price/Effective Price

I equate Net price with Effective price because they both are calculated the same way and they mean the effective Procurement Cost of any Material.

Please let me know if you need any other explanation.

Cheers.

Keshav

Former Member
0 Kudos

Hello,

Net Price = Gross price + surcharges - discount

Effective price = Net price + nondeductable taxes + delivery costs - cash discount

Nikhil

Former Member
0 Kudos

Hi Kali,

Your problem is only the close meaning of all the English words here. I will try to put forth my understanding of these words to help you.

Basic cost

-- Discount (if any)

+ Freight

+ Taxes

-


Gross Price

-


-- Non-inventorised protion of Taxes (like CVD credit in India)

-- Discount (if any)

-


Net Price/Effective Price

I equate Net price with Effective price because they both are calculated the same way and they mean the effective Procurement Cost of any Material.

Please let me know if you need any other explanation.

Cheers.

Keshav

Former Member
0 Kudos

Hi Kali,

Your problem is only the close meaning of all the English words here. I will try to put forth my understanding of these words to help you.

Basic cost

- Discount (if any)

+ Freight

+ Taxes

-


Gross Price

-


- Non-inventorised protion of Taxes (like CVD credit in India)

- Discount (if any)

-


Net Price/Effective Price

I equate Net price with Effective price because they both are calculated the same way and they mean the effective Procurement Cost of any Material.

Please let me know if you need any other explanation.

Cheers.

Keshav

Former Member
0 Kudos

Hi,

Net Price= Material Price with Discounts

Effective Price= Net Price + Transportation Charges + tax