Pricing research and development services in the USSR

Abstract

Most Soviet applied research and development (R&D) is performed by organizations of industrial branch ministries. Pricing of applied R&D begins with calculations of costs. which are often inflated. Soviet specialists disagree on whether R&D prices should include a profit above cost, and, if so, how the profit should be determined. Current pricing schemes for applied R&D include profits based on planned wage cost, on planned total cost, or on the economic effect of the R&D.The use of the last pricing method is analyzed and evaluated in detail. In principle this method creates incentives for timely delivery of high quality R&D results suitable for assimilation into production. However, in practice the strength of these incentives is considerably weakened by a number of factors.