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# Determining the price of your product - PowerPoint PPT Presentation

Determining the price of your product. Brainstorm…. A list of all factors you think a company would need to consider when pricing a new product. Key Factors to Consider. Materials Labor Expenses Profit. A Simple Formula. Materials + Labor + Expenses + Profit = Wholesale x 2 = Price.

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## PowerPoint Slideshow about 'Determining the price of your product' - velma

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### Determining the price of your product

A list of all factors you think a company would need to consider when pricing a new product.

• Materials

• Labor

• Expenses

• Profit

A Simple Formula

Materials + Labor + Expenses+ Profit = Wholesale x 2 = Price

• Make a list of all the material fees you anticipate you will encounter

• Don’t forget the smallest things like thread, to the largest such as packaging!

• If you need to “guesstimate” err on the side of caution

• Consider all labor costs that will go into making this product

• Often forgotten: marketing department, maintenance staff, accountants

• Research average salaries of employees in your area of production

• What additional cost(s) will it take to produce this?

• Expenses to consider: rent, travel, office supplies, research materials, marketing materials (advertisements, website domain)

• Steps:

• Write down all additional costs per month

• Decide how many items you want to sell per month

• Divide cost by number of items sold

• Think about where you want your company to be in the future

• Will this be your only source of income? Will you have more than just one product?

• Good rule of thumb:10% of Materials, Labor and Expenses

Materials + Labor + Expenses + Profit = Wholesale Price

Why Not Stop There?

• This may seem like a very affordable price for your product, but…

• Selling your product at wholesale price undervalues those selling at proper retail price- when the majority of sellers price thoughtfully, everyone benefits

• Customers will wonder why it’s so low. Are the materials not as good quality? Etc…

Wholesale price x 2 = Selling Price

• How does your price compare to similar products?

• If the item is priced too high for the market, it’s not the price you need to alter, it’s the design or way you produce the work

• Can you produce the product in multiples, reducing the labor?

• Don’t take the easy way out by slashing your prices!

• Consider all the factors you need to calculate in order to formulate a price

• Complete the worksheet provided to determine the price of your product!