when is shadow pricing used 
shadow pricing is an incredibly useful tool when evaluating a project even though shadow pricing only provides a rough estimate it helps management assess the value of certain operations and attempts to place a monetary value on the different tasks associated with the project furthermore when a company wants to run a cost benefit analysis it must use shadow pricing to assign values to intangible items shadow pricing is also frequently used in public policy in order to designate the value of various public infrastructure projects such as public transportation parks and bike lanes economists seeking the societal value of projects like public parks will use shadow pricing to demonstrate the benefits of certain infrastructure projects that are not typically assigned a monetary value example of shadow pricingan example of shadow pricing as applied to a proposed business plan to renovate a company s office facilities might be the assignment of a dollar value to the expected benefits of doing the renovation while the cost of the renovation can easily be assigned a dollar value there are elements of the project s expected benefit that must be assigned a shadow price because they are not as easy to quantify the possible benefits of the project include the following since it is impossible to assign a precise dollar value to such potential benefits an estimated shadow price is assigned to set a dollar figure to compare with the cost figure shadow pricing faqsshadow pricing is used by analysts and economists to assign a monetary value to non marketed goods such as production costs and intangible assets shadow prices are essential to running an accurate cost benefit analysis of a project shadow pricing provides management with a fuller understanding of the costs and benefits associated with a project in the world of public policy shadow prices help determine whether or not a public project is worth pursuing shadow pricing can save money by demonstrating the appropriate path of action to take 