Fundamentally all businesses need to know their breakeven point. To do this they need to know their fixed and variable costs. This knowledge should give a business the minimum price they should charge for a product or item or service. This can very complex if you have many differing items at differing costs but it can be done. I should emphasise at this point a minimum price.
Armed with this knowledge a business should then get an idea of the market price for a product / service. If this price is lower than the minimum price/breakeven price then clearly there is a problem and the drawing board needs to be found. If its higher, great it means that the business (assuming the product/service can be sold) will make a profit.
So far so good; a business needs to needs to check that as the sales increase; so the percentage profit increases; if not no point increasing sales.
· Sales are a bit low should I as a service drop my prices?
· I keep losing money because I help someone quickly and get no money upfront
· Someone is offering me commission only sales but they want me to do some marketing research first
· The more I sell the more I lose
· I sell more but my %profit stays the same
· I can’t charge that much
· No – why would you?
· Explain that like a washing machine repairer there is in effect a minimum charge and nothing happens till that’s paid.
· Ask for a fee upfront to cover the research and await the reaction
· Get a finance expert to look at costs
· As above
· Why? Does the client / customer get a great return on their investment – if so let the client be the judge not you
And finally; my 16 year daughter is raising money for a Girl Guide trip and is selling cakes at 50p each. So like an idiot I said why not 60p; the answer was they can buy two for a pound then – one for them and one for a friend. See there is more to this pricing than meets the eye.
Thanks – comments always welcome