I am asking this question out of it's category because I know a lot of smart folks hang in politics?

Question

My question is about profit. lets say you introduce a product to a certain area. You pay for shipping and you got a lot of other overhead. How much would you charge for the product you are selling. What is the business rules. 2 times, 3 times for the amount you purchased it for in whole sale. I need a deep insight form a business minded person. I am sure there is plenty of you out here. You won't bore me if you make your answer long. Thanks .

Answer 1

Well--it varies. Here's why: part of the analysis depends on you're rate of inventory turnover. If its rapid, you need a lower factor (and thus price). There are other factors as well.

The basic criteria are the following:
a) the cost of getting/manufacturing your inventory.
b)the cost of fixed expenses (rent, etc.)
c)the added costs for each item (shipping, etc.

Lets say (a) and (c) are each $5 ( these two, added together, are your "marginal cost) . and lets say your fixed costs (overhead) is $1000 per month.

Now, lets pick a 4x (that's high--I'm just creating a simlified example to show you how this works). That means 4 x $5("a"--cost of the item) or $20. That's your selling price.

Now, if you do a bit of math, you'll see that you can figure out how many items you need to sell each month to cover your overhead--that's your B/E (break even) point.

B/E = $1000 (overhead) divided by ($20 (price) - $10 (marginal cost)) = 100 (number of items you must sell.

Now--where does your profit come from? The answer is tha , once you have reached the B/E, every additional item you sell will cost you the marginal cost ($10) but get you $20. The more items you sell over the B/E point, the more you make. Sell a total of 200 items (B/E plus 100) and you make $1000.

Now--here's my suggestion--if you are (a) interested or (b) are really going into business (ABSOLUTELY if thats the case):
First, read this through and work it out on paper yurself, suing different combinations of cost,overhead, etc. until you understand it.
Second, get a textbook on "microeconomics" and read it (depending on how serious you are, work through the problems too.
Third--while as far as I'm concerned you're welcome, you'll get better Y/A answers in the business section or in the economics section (under social science).

Good luck.

Answer 2

There are too many variables for a standard answer. You should get what the market will pay. Generally, I would start with cost plus 35%. If there is a lot of competition you will probably only be able to get cost plus 5-10%. If it's a unique product and the cost is not too high, I would try for cost plus 100%. The more unique the product, the higher the return can be.

Answer 3

its all dependent on competition. if its a product people are already buying you should check other dealers to see and be competitive. if it is a new product and there is no similarity to other products it is anything that people are willing to pay. I would do a cost / sales analysis at this point. figure out about how much your total cost is (include everything you think cost money, from materials to the light bill.) estimate how much you are willing to produce and figure out your expected profit for different prices and go from there. Business is not cut and dried a product is only worth what people are willing to pay but you dont want to give away a superior product too cheaply so saying 2X or whatever is not a good approach

Answer 4

Hmmm, there is no set formula.

Factor in all your costs - regardless of volume - and add a reasonable profit based upon demand, originality and functionality. Oftentimes, generous profits margins cause buyers do deem your product as being more desirable, so a lot depends upon who you are marketing to.

Most here do think their capable of running the Oval Office however, that only proves how dumb we - as a group - really are.

Answer 5

If you're including shipping in the price you want to get hold of whatever carrier it is that you're using for your product and find out how much you can mark up the product to cover it. Generally 2x's is acceptable depending on what you're selling. If you're distributing many different products you may want to make a flat shipping rate based on a price breakdown.

I hate to think how much overhead you have, are you manufacturing a product?

Answer 6

Cost of product plus transportation and selling expenses add into it the profit supposed to be earned without the other costs. Profit with honor is the principle in selling to get loyal customers.

Answer 7

The only rule is how much the product is worth to the customer.

If the customer can realize a 5billion dollar improvements by buying your goods, then you can charge 4 and half billions.

If your total costs, include R&D come to $30 a piece and your customers use it for casual convenience, then you can charge them 20% as your profit, so you can keep going.

Answer 8

Why the lack of know-how? it extremely is not something to do with them being iron any steel will do and cutting-area horseshoes made up of aluminum alloy is merely as good for the reason they're used! Horseshoes are fastened with the open end as much as carry luck! If located the different way up each and every of the luck runs out! it extremely is not Irish yet around the English speaking international!

Answer 9

You also have to take volume into account. The greater number of widgets you sell per hour or day or week also factors in to how much overhead you should tack on.

Answer 10

You might find a better answer in the business section of this forum opposed to the politics section.