Ceiling Prices

(Russian, limitnye tseny), in the USSR, the upper limit on the price level for a particular type of product.

Ceiling prices are set when the production of new types of articles (materials) and nonstandard equipment is being planned. They are also used for calculations of the estimated cost of capital construction in relation to the articles and materials being used when these articles lack confirmed wholesale prices at the moment that drafts and estimates for construction are being made. Ceiling prices are determined by the organization that issues the assignment for designing these new products. When series production is being considered, the ceiling price must be confirmed by the manufacturing enterprise.

Different systems of calculating ceiling prices are used depending on the type of product or its purpose. Ceiling prices for new articles (materials) that will replace previously incorporated output are calculated by a special methodology for determining wholesale prices for new products. Ceiling prices for new single-type articles (materials) not intended to replace previously incorporated products are established using the technical and economic parameters included in working out the cost estimates of capital construction projects; these prices are estimated using a reduced cost factor (for most sectors it is 0.8). Ceiling prices for fundamentally new articles (materials) being made for the first time in the USSR are determined on the basis of consolidated norms of material and labor expenditures. For non-standard equipment (articles), group ceiling prices are computed in reference to the technical-economic index (such as unit of power, productivity, or usable capacity) that is appropriate to the particular equipment group and determined chiefly by its operating characteristics.

The use of ceiling prices in the stage of planning new types of articles (materials) makes it possible to establish their economic efficiency in advance and thus avoid the development of products that are not beneficial to the national economy.