Determining the price of a product is one of the most difficult questions in business. Generally speaking, the price of a product is determined by the market, but you also need to consider the cost of producing your products in order not to work at a loss.
Instructions
Step 1
Determine the variable costs per unit of output. These are the sums of monetary investments, the size of which varies depending on the volume of production, divided by the amount of goods produced.
Step 2
Calculate the fixed costs. Their size does not change depending on the number of goods produced. These may include rent and utility payments, salaries of management personnel, depreciation of equipment, trading costs, etc.
Step 3
Decide how much product you will be producing. This quantity can determine both the possibilities of production itself and the size of the sales market.
Step 4
Decide on the level of income that you would like to receive. Add to it all the costs of manufacturing items and the additional costs of expanding production. This amount divided by the number of products produced will give the required price.
Step 5
Analyze the market. Compare prices for similar and substitute products from your competitors. Adjust the value of the value of the goods you produce depending on the quality. If the competitors' products are slightly inferior, then you can set the price higher than that of competing companies.
