Pricing

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How will you price your product to cover all costs and still achieve your desired profit? This formula may help: Selling price = Total costs per unit + profit.

1. To determine the selling price for each unit, first decide the size of a unit. It may be one item or 100, depending on how easily you can break down your product or service and the time frame. Maybe it's easy for you to calculate expenses monthly, maybe weekly. At QIFF, workers produce 10 monster tables each day, therefore one unit is 10 items per day.
2. Now fill in the blanks for the following factors:
   

   		For QIFF	For Your Product/Services
   Unit size/time frame:		10 tables/day
   Cost per unit for:	a. Manufacturing	$450.00	$
   	b. Operations	$75.00	$
   	c. Labor	$280.00	$
   	d. Marketing	$10.00	$
   	e. Sales	$15.00	$
   	f. Distribution	$25.00	$
   	g. Overhead	$95.00	$
   	h. Freight	$15.00	$
   	i. Taxes	$150.00	$
   	j. Other	$75.00	$

3. Add the total cost of items a through j. (For QUIFF: $1,190.00)
4. Divide the total in #3 by the number of items per unit. (For QUIFF: $1,190/10 = $119.00)
5. Now, have you considered the standard profit margin in your industry (for wholesalers, retailers and salespeople) and how much you will mark-up the product or service for profit? Include those figures below, where applicable.
   

   	For QUIFF	For Your Product/Service
   Wholesalers	N/A
   Retailers	5%
   Salespeople	N/A
   Owner(s)/Stockholders	10%
   Total mark-up:	15%

   Add that figure-the mark-up and your profit margin per product/service-to the figure you just calculated at #4. You now have your selling price per unit.
   
   Sales price for QIFF table is: $119+ $17.85 (15%) = $136.85
   Sales price for your product/service is: + = $
   
   
6. Is your price higher than competitors' for comparable products and services?
   Yes No
7. Does superior quality and high demand for your product or service justify premium pricing?
   Yes No