Pricing Your Products: The 411

So first off, what does “the 411″ mean? I remember that little saying from middle school & that was like, so 15 years ago! Whoa, that makes me feel old. Weird.

Pricing Woes

Anyway, pricing products is always a struggle. At least for me it is. You have to consider so many different factors & it varies depending upon what your selling & the value associated with your product. Ugghh!

Well, I just found a little pricing formula that helped me recently so I changed all my prices in my shop & honestly I’m still deciding what I think about it. I’m still getting traffic & some sales, but not as many as I was before. I’m in the process of continuing to evaluate my market & my competitors. Eventually I’ll know if it was a good move or not.

The Breakdown

Material Costs

This is the cost of each & every material that is directly used to make your product including packaging materials & marketing materials used with the product.

Labor Cost

This is the cost to make the product whether it’s you making the product or an employee making the product. This is usually the trickiest part because we tend to price our time on the high end which in the end can make our products price unrealistic.

Remember when thinking of labor costs, how much do you want to make {or pay} an hour & how long does it take to make the product start to finish.

Overhead Cost

This is everything else other than material & labor costs. I can be rent, marketing expences, tools, equipment, electricity, internet, phone services, etc.

Profit

This is what you make after you’ve paid all your expenses.

Markup

This is a percentage of the materials &/or labor cost that’s added to reach a price.

2 Prices per Product??

Now some of you may not realize that each of your products actually has 2 prices. There’s a wholesale price & a retail price to consider…that is unless you’re not interested in wholesaling at all…then you’d only have one price.

 

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Article originally featured on Meagan Visser. Republished with permission.