Pricing your products: An introduction

Hello readers, today I am going to be writing about ways you can price your products. The pricing of your products will contribute to the success of your business. Prices must be high enough to cover your cost as well as make you profit. Your price must cover your costs if not you will be making losses and you definitely do not want that to happen. Some individuals put a markup on their costs, some use a profit margin, others use similar prices to that of the competitors.

The most popular method used is the profit margin. A situation where profit is calculated as a percentage of the sale price. A 20% profit margin on a sale price of $150 will give you $30. If you just have your cost price which we can infer from this is $120. Your sales price will be $120/(100%-20%) . You will get $150, from there you will know your profit will be $30. This is one way to price your products.

The second method you can use is the cost markup, which is a situation whereby you add a fixed percentage to the cost of your products to get your sales figure. For example, a mark up of 25% on a product costs of $100 will give you $25 as your profit, thus your sales price will be $125. This is another method you could use. You should know the difference between the profit margin and the cost mark up.

The third method is the competitive pricing. This is a situation where prices are fixed based on the prices of other competitors. For example if competitors are charging $20 on a small pack of rice, someone using this pricing strategy will also charge $20 for his/her own pack of rice. Competitive pricing is used when it is difficult to differentiate your own products.

That is all for today, thank you for reading this article, keep checking my blog regularly, cheers!

Comments

How can your strategy be successful

Hello readers, today I will be telling you about ways to make your strategy a successful one. The scope is your strategy must be fit, in other words your strategy must be consistent with the environment your business operates in. When I say environment, I am talking about both external and internal environments. Thus, you must understand the political, economic, socio-cultural, technological and legal environments your business operates in. The environmental protection that affects your organisation must also influence you when formulating your strategy. Therefore, PESTEL analysis can be used to understand the external environment of your business. The internal environment also needs to be understood, as your strategy must also be in alignment with the internal environment. Understanding your internal environment will help you know the resources your business has, the capabilities of your business as well as the structure and system. The SWOT analysis can be used to help y...

How to Make Money from Gold

We used to operate in a gold standard system in the past, it is common knowledge that we presently operate in a dollar based system. A system where each country measures the value of its currency against the dollar for the dollar based system and the gold for the gold standard system. The gold used to be a yardstick for measuring the value of a currency, although it is no longer used to measure the value of currencies these days, it has maintained it's prestigious value. Gold a very valuable metal, its prices depreciates at times and appreciates other times, but looking at its trend over 100 years, the prices have always appreciated over 10 years or above. From 2006 to 2015, the gold price per ounce appreciated by 200%, while from 2002 to 2015 it appreciated by 300%. So Long term investors go ahead and purchase gold. You must always pay zakat on the value of your gold when it reaches the nisab which is 87.48 grammes. However, you can give charity (sadaqa) from it. Alla...

The Istikharah Prayer

Hello readers , today I will be telling you about the Istikharah prayer. It is a prayer of guidance. When you want to make a major decision in your life, it is best you seek Allah's guidance. You should always pray to Allah to guide you through the right path in your daily activities. Istikharah prayer is recommended for a major decision such as getting married, starting a business and others. How do you perform the Istikhara prayer? Make two rakats (Nafila). During your first rakat, after reciting Surat Fatiha recite Surat Ikhlas, during your second rakat after reciting Surat Fatiha recite Surat Kaafirun. After saying Asalam Alaykum Waramatullahi to the right and then the left recite this: "Allahumma inni astakhiruka bi-ilmika wa astaqdiruka biqudra-tika, wa as'aluka min fadlikal Azeemi fainnaka taqdiru wa la aqdiru, wa ta'lamu wa la a'alamu, wa Anta Allamul-Ghuyubi, Allahum-ma in kunta ta'lamu anna [then mention the thing to be decided] khairun ...

Islam and Business Finance

Search This Blog