Definition: At Cost - Explained
When something is sold 'at cost' it indicates that the sale price being paid is the same that the reseller paid for the item.
Merchandisers do this to entice buyers to make yet other purchases - turning toward those with a decent markup, or the easier sale that is brought in numbers. They may also gain incentives from their source(s) by achieving a targeted sales volume. Frequently an upline source such as a headquarters or distributor has such items marked to be cleared from inventory. Or the store can't keep an item on its shelves for other reasons like due to spoilage, shelf life, or there could be expectations of sales declines.
Many times 'at cost' is not a straightforward concept for a consumer to place his or her trust in, or even find a way to arrive at. There are variables that can render this price-level debatable including; if costs are determined by in-house manufacturing or by contracting out, also, particularly, how any and all such costs are accounted for and if this could encompass factors like any differences in exchange rates of foreign currencies, and factors such as transportation.
Also to look for is the type of item and when the merchant purchase had been made, given that many prices tend to fluctuate. Prices could have undergone an increase or a decline. If a retailer has managed to hold storage on a ton of pc flash drives at five or six year old pricing then this will tend to inflate things a bit.
Items and merchandise being profferred 'at cost' amounts may be prior to or part of a strategy that follows with below cost pricing in order to further motivate sales.
TipsFor 'at cost' to be incentivized for the end consumer, the price at which the amount being paid is based on should really have either (a) increased since that time of purchase or else (b) the item should be in less supply or have been made less available since it was merchant bought in order to be of potential advantage to the consumer.