I know a lot of people that like to sell some items like bracelets, baked goods, and t- shirts, on the side to make some extra cash. The most important thing that people like this need to think about are their costs so they can determine their selling price. Knowing your costs requires you to do a deep analysis of your production process. Here are some questions you can ask yourself in order to determine your final cost:
– How much did I spend in purchasing my materials? This is the most basic question to ask yourself. It’s the one that most people think about when determining their selling price.
– How did these materials arrive to my workstation? You need to take into consideration the transportation costs of getting these items brought to you. If you went to buy your production materials at the store, think about the amount of gas you spent. If you ordered it online, were there any shipping charges?
– Did my utilities bills go up? Most of the people that I am referring to, start their business from home and they use it as a manufacturing plant. Think about the electricity costs, and the cost of other utilities that you use in creating your product or delivering your service.
– How much time did I spend doing this? A lot of people overlook this. Your time is valuable. It should definitely be taken into consideration when figuring out your costs to determine your selling price.
Learn from My Mother’s Mistakes
When my mother started selling bracelets, her selling price was $25. Some customers were willing to pay with no problem, while others wanted a lower price and for the bracelet to be customized to their specification. If I had not stopped her, she would have gone to the store and spent money on more materials for a nonprofitable customer. Do not think about dropping your price if you know its worth. If there are customers who are not willing to pay, then market your product to those who are willing to buy.
How to Calculate Your Product Selling Price with 2 Easy Pricing Methods (smallbusinessrainmaker.com)