Below are some general tips on pricing. However, it’s important that you note the following:
1. I am hesitant to recommend universal pricing strategies for all products and services because critical variables differ significantly by industry, geography, personal goals, size, location, and many other or https://npfinancials.com.au/reasons. But since you understand your resources, costs, forecasts, and goals better than anyone, you’ll have to fill in the blanks.
2. I am not an expert in business (or personal) finance. This website is devoted to helping you become an excellent marketer. So, while it’s appropriate that I cover pricing and financial planning as part of the marketing process it would be irresponsible to delve much further.
Tips:
1. Make sure you consult with an objective financial advisor – one that specializes in small business investment capital, cash flow management, and the like. Many, many small businesses go under due to lack of proper funding. Make sure you have enough money, particularly in the first couple of years, to weather unexpected storms.
2. Arrive at ballpark pricing by assigning costs by product. You can start with your costs and work up or begin with a proposed price and work back. Here’s an illustration how of this works:
Let’s assume I am (once again) a widget retailer and the following is true:
Money I receive when I sell one widget $10.00
- Less labor and materials (costs to produce one widget) or my cost of goods sold (COGS)
- Labor (yours or anyone else’s) – 2.00
- Materials – 1.00Gross Profit (amount of money I’m left) $7.00 This means my gross profit margin is 70%
- Less Administrative Costs (rent, utilities, office supplies, furniture, mgmt. salaries, etc.) – .80