Price–performance ratio

The prize money of the practice of awarding public contracts and in the area of private sector spending is in the Business Administration, the code for the quotient between the cost and a clearly defined product performance called ( cf. goods and services).

General calculation

Example: € 1.5 million transfer fee / 40 goals scored = 37.500, - € per goal.

This general observation is not enough in most cases to differentiate to compare different offers. Especially for complex products of value in use is determined as the first regularly even code and then represented in the general formula.

Differentiated calculation

A closer look at the price -performance ratio is achieved with the help of a pre- conducted cost-benefit analysis of different benefits. The result of such pre-selection can then be in the form of a meaningful indicator for the price in a relationship set.

Such a view is, for example, the " UfAB III " in the extended benchmark method is based for the award of public contracts. For this, the value for money will be identified:

Also in the advertising industry, the price-performance ratio is expressed as a cost per contact ( CPM per thousand price). It is said, what is paid for it to reach 1,000 people in the target group. The CPT therefore illustrates the " Value for money " in relation to the range.

In the equity business, the Price - Earning to Growth ratio ( PEG ) expresses a kind of price-performance ratio for securities. It represents the price-earnings ratio (PER ) of the Company in relation to the projected long -term growth rate dar.

Here, the price-earnings ratio by the forecasted long-term earnings growth rate ( "growth " element ) is shared. A low ratio expresses here from attractive growth potential of the shares valued and the lower the share in question is evaluated. A PEG in the range of 1.00 is considered fair assessment. The price-earnings - growth provides a longer-term perspective than the price-earnings ratio.