The price lower bound indicates the selling price, which an enterprise for its product must demand, in order to exist at short notice or on a long-term basis.

In economic bad times, which are characterized by paragraph losses, management will be forced to lower the selling prices in order to stop the decrease in sale. One must then however be known to suffer in which extent the price reduction be made can, without losses.

The long-term price lower bound specifies the price, which leads to cost-hitting a corner proceeds. Production can be continued in this situation over longer time, since replacements of investments are feasible. For the preservation of the jobs and for the stabilization of the paragraph management will aim at this price lower bound.

Earlier net sale price - price reduction = new net sale price 

Result statement:

  Sales profits - variable costs = Deckungsbeitrag1 - product-fixed costs = Deckungsbeitrag2 - product-group-fixed costs = Deckungsbeitrag3 - enterprise-fixed costs = operating profit/working loss 

If the sales profits are sufficient altogether, in order to cover all resulting costs, then the selling price achieved the long-term price lower bound.

The short term price lower bound (price lower bound =absolute) specifies the price, which covers exactly the variable unit cost prices. At height of the entire fixed costs (=Kosten the operating readiness) then a working loss results.

Short term price lower bound:

Variable costs/paragraph (piece)

The short term or absolute price border is reached, if the net sale price covers the straight variable unit cost prices of the product. Without substitution of the fixed costs resulting anyway temporarily one does.

Liquidity-oriented price lower bound. The adjustment of the selling prices after the short term price lower bound can bring an enterprise in liquidity difficulties. Since in the short term price lower bound only the variable costs are seized, the fixed costs, which lead at short notice to expenditures, remain unconsidered, that are in particular renting expenditures, operational taxes, salaries, wages, social one deliveries, insurance premiums. The liquidity-oriented Preiuntergrenze is specified according to the following calculation:

Variable Kosten+ausgabewirksame fixed costs/sales volume

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