The pricing system used when one unit of a company transfers goods to another unit.

Transfer price policy is generally aimed at assessing financial performance of different business units of a conglomerate. It is also used as a system to move earnings from a high tax jurisdiction to a low-tax one, although this practice is often considered by authorities as tax avoidance and encourages internal fractions of multi-divisional companies to deal with each other at market cost. This practice is also referred to as transfer cost.

See also:
Marginal cost