Take for example, a food business. Currently, many players who cultivate the same field. If the sale price that you apply to consumers apparently do not compete with other players, such efforts may be dim slowly as consumers switch to another place.
Well, before determining the selling price to the consumer, you have to calculate exactly, what the cost of production your responsibility. Your biggest concern should goes to the cost of production becomes an important factor of a product. For example, if you are doing business fried chicken flour, most big production costs are chicken raw materials that can be worth 30% of turnover. Chicken prices up and down, of course, will affect the selling price.
In general, to calculate the cost, you need to separate the two components of the cost of the venture, the fixed costs and variable costs. Cost of electricity, telephone, and salaries including fixed costs. That is, the costs are not affected by the volume of production or sales volume. Portions fixed costs no more than 50% of product sales value.
The variable cost is the cost of the value depends on the volume of production or sales volume. Costs of raw materials and fuel engine, for example, in the group of variable costs.
But, do not forget the cost of entertainment as a component of cost. In essence, the cost is used to facilitate the effort. For example, the cost of entertaining colleagues and associates.
Pricing strategy
After determining the costs incurred, you need to specify at what price to the consumer. Determine the selling price will affect how much you enjoy the benefits and achieve a turnover. However, determining the selling price to the consumer, it was not as easy as turning the palm of the hand.
Setting the right selling price is one of the key factors for success in entrepreneurship. You have to set prices carefully. Therefore, the extent to which a product depends on the selling price to the consumer.
In general, to determine the appropriate selling price, entrepreneurs need to know the cost, the cost to get the item. Cost is added to the other costs and benefits that are expected, then out the sale price. However, the cost of production approach of this kind is not raw.
If a product is difficult to find in the market while demand is high, employers can set a higher selling price. Conversely, if there are many competitors, you need to set a low price. To set the price of the product, after calculating the cost of production, it is necessary to see the price of competitors.
Your selling price should be almost equal to the selling price of competitors for similar products. You may set the sale price a bit higher than competitors, if the sites are selling you more strategic, more luxurious showroom, or have more repeat customers. If excellence is not there, you need to set the price a little lower.
Although low, the selling price of your stay must bear profit. Approximately 10% to 20%, it is reasonable margin, provided no loss.
Only businesses that do not have an edge or want to reach a wider market, setting the selling price becomes an important factor. You can use the price factor to bring in customers.
For example, by giving discounts for certain products. The goal is that customers arrive or are interested in switching to a product or service.
Evaluation of the strategy
You can give discounts if customers buy in bulk or purchase with delivery within a certain timeframe. For example, there are buyers who will sell more products in another city, you can give them a bigger discount if payment in advance. Discounted rates are also included as a variable cost with other promotional costs.
After making pricing strategy, you have to evaluate all of the strategy periodically. For, if the pattern is not a discount program gives a nice effect, customers are not sensitive, do not even care. Or, if a competitor is doing more creative pricing, then giving a discount to a counter-productive strategy.
Furthermore, if the sales are high enough and have enough customers, you can raise prices gradually to obtain a reasonable profit. However, the increase should not be abrupt or too high because customers can switch back to competitors. Therefore, the price increase should be gradual so that consumers are not surprised.
In setting and raise the price of the product, you need to look at the purchasing power of consumers to target your market. If your target consumers are from the middle to lower income, for example, may hike product prices will have a big impact on your business, so that consumers turn to your competitors. Another case if the product you are prestigious, unique, and rare.
So, congratulations to calculate the cost of operations and the sale price wisely,
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