Selling Cost - Definition & Meaning
What is Selling Cost?
Sales costs are the costs incurred by the sales department in marketing and distribution of the product. These costs include the following:
1. Salespersons’ salaries and wages
2. Commissions
3. Showroom rent
4. Advertising
5. Promotional expense
Difference between selling cost and product cost is that the latter is is incurred to manufacture a product and provide it to the consumer whereas selling cost includes those incurred to alter, change or create the demand of a product. Hence cost of production includes manufacturing cost, handling, and transportation, storing and delivering cost.
It includes all the expenses which must be met to provide the product or service, transport it o buyer and put it into his hands to satisfy his wants and on the other hand selling cost includes advertising in its various forms, expense of sales department and sales agencies, window displays and other displays of various kinds. The costs made to adapt the product to the demand are the cost of production and costs which are made to adapt the demand to the product is selling cost. It should be taken care that distinction between product and selling cost cannot always be made distinctive as in some cases it could not be said whether product is made to adapt the demand or vice versa. For example cost on attractive packaging could not be segregated into product or selling cost.
Hence, this concludes the definition of Selling Cost along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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