Tuesday, January 2, 2018

Tip #251: The Price Is Right: How to Price Your Products

Happy New Year!

If you aren’t already evaluating your pricing strategy on a regular basis, the arrival of the new year is as good a time as any to get started. The first step when evaluating your product prices is to ensure you are factoring in the full cost of your product, including overhead. Below we've updated material originally published in RCI's Kettle Talk magazine (Members: Login to view article) to help you evaluate the price of your merchandise.

Know Your Profit Margin
Example: A candy company produces boxes of candy that sell for $25 each. The entire cost to produce the box of candy is $8. That makes the company’s net income $17 ($25 - $8) and its revenue $25. The profit margin would be 68% (17 divided by 25).

Once you've determined pricing that best covers all your costs, devise a plan to regularly reevaluate your pricing to keep up with the marketplace.

Note: RCI is in no way suggesting a pricing formula. This is a suggested list of items to consider for your company’s pricing equation.

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