Cost means the expense that a business incurs in bringing certain product or service to market. Price refers to the amount a customer pays for that product or service. The difference between price and cost is that the profit the business makes when the item sells. In other words, price means the amount customers pay for a product. For example, when you pay a price for something, it represents the value of what you have to give up for a product or service. Cost, on the other hand, is the amount spent by a business on producing the product. Cost often consists of two elements:
variable cost (the one which vary in proportion to the quantity produced) and fixed costs (the one that is required for production to take place but which do not vary as output varies).
