How to calculate the price
Video: How To Price Your Products: Handmade Business Pricing Formula That Works 2024, July
Price is an expression of the value of the goods in money, or the amount of money for which the seller is willing to sell, and the buyer can buy a unit of a certain product. The formation of the final price of a product occurs under the influence of the cost of its production, the value of the product, supply and demand on the market, competition and government regulation.
Instruction manual
1
Pricing principles are based on two aspects. Firstly, the price is determined based on the costs incurred by the enterprise for the manufacture of goods. Each commodity producer seeks to get the greatest profit, laying it in the price of products. In this case, there is an orientation to consumer demand for this product. In this way, the price is added through bidding, when the seller and the buyer converge on a profitable for both. Secondly, prices are formed taking into account competition in the market of similar products. At the same time, sellers do not place pricing at the head of their own costs or demand of buyers, but the average level of prices in the industry or the prices of the leading product. Therefore, it is important when calculating the price of goods to take into account all the nuances, both dependent on the manufacturer and spontaneously imposed by the market.
2
There are different types of prices, and therefore their calculation is also different. The closest retail price to us, end consumers. This is the price at which retail goods are sold in small quantities for personal consumption. Retail prices are free, under the influence of supply and demand in the market. The retail price is always based on the wholesale price - this is the price at which retailers purchase goods from manufacturers. A wholesale margin is made at the wholesale price, which includes distribution costs (salaries of store personnel, transportation costs, costs of packing and packaging of goods, etc.), as well as profit of the seller. Trade margins are set by retailers themselves.
3
In addition to retail and wholesale prices, there is a selling price. It will coincide with the wholesale if excise duty is not included in the cost of goods. If the number of intermediaries in the process of selling manufactured goods from the manufacturer to the final consumer is large, then the price rises and its structure becomes more complicated.
