How can you generate prices for goods and services?

Answer 1

There are a number of ways.

Firstly you need as does any business to know what it costs the business to product a product or deliver a service.

All business have overheads (costs) These will (for the example here) be the cost of the utilise such as heating, lighting and water. The cost of man-power, the cost of the raw materials to make the product, the machinery required to make the product to the point where its ready for the customer to buy. You will need to include the cost of transporting to the customer, the packaging to hold the product and even the cost of the space required to store the product ready for delivery.

Then you need to look at the administration of the business, telephone charges, line rentals, computers and monitors, printers and their inks, envelopes and paper for billing, postage charges and the software needed to maintain this like word processors, databases and of course you'll need to cost in accountancy packages and people to use these.

Its a considerable amount of work figurug this out. But is is vital as you need to know what costs you have to cover to make just t the one item. Then you can start to work out what the company needs to operate you can start to look at what you are going to sell. You need in the first stages to work out the "making" or production process of the product time and materials need to make the one and then you can ascertain what the break even cost is and then add in a % for profit margin

Selling a service is similar

Whilst this seems a huge piece of work it is actually what every new business needs to do to get a cost factor accuratley in palce.

You can, if you have a "competitor" selling the same service or product find out what they charge and start at that poin but you will still need to be mindful of what its costs YOU do make or provide a product/service. The leaner you can work and keep cost down (because youve looked at your running cost) the more cometitive you can be.