1. Discuss the value in determining total cost of buying or owning a product or service and identify major components that make up the total cost of a product or service. Also discuss the categories of cost that influence price and differentiate between direct and indirect costs.
2. Discuss the negotiation process and when it is good to negotiate and also discuss the characteristics that make a successful negotiator.
Negotiation Process and When to Do It
Total Cost of Product or Service
To determine the total cost of buying or owning a product or service, take the costs that represent a constant value and costs that fluctuate - to calculate the monthly total product cost, add the total fixed and variable costs for the month (Thompson, 2011). Calculate the sum of all fixed costs that are connected with the product.
Major Components Making up Total Costs
Fixed costs are overhead items (rent, utilities, and insurance) and any items that are needed to run the business. Additionally, other fixed costs are equipment costs and depreciation (Thompson, 2011). Variable costs connected with the product are ones that depend on the quantity of the product produced by the organization.
The solution discusses categories of cost, negotiation and successful negotiator.