Has anyone know how the method or way of pricing a product? How could hell and a lot of variety. I will discuss only two basic approaches in determining the selling price.

First, the cost approach that is cost-plus pricing, mark-plus pricing and break-even pricing. The second approach to the market or competition.

1. Cost Plus Pricing (Cost-Plus Pricing Method)

If you use this method, you determine the selling price per unit of your products by calculating the total cost per unit plus a certain amount to cover the profit that you want on the unit, or is called margin. Product selling price can be calculated using the formula:

Total Cost + Margin = Selling Price

Examples like this. Suppose you have a fruit juice business and get the order as many as 100 glass for a farewell party. Costs you may spend to produce as much fruit juice is estimated 400,000.00 with the details:

* Raw material costs: USD. 250,000.00
* Labor costs: USD. 100,000.00
* Other expenses such as depreciation of equipment, rental places, etc.: Rp. 50000.00

If you want a profit of 15% of the total cost, therefore: Total Price = Total Cost + Profit = Rp. 400,000.00 + (15% x USD $ 400,000.00) = Rp. 460,000.00. Thus for any juice you sell, the price of Rp. 4600.00.

2. Mark-Up Pricing (Mark-Up Pricing Method)

In essence, mark-up pricing is almost equal to cost plus pricing. The traders or trading companies use more pricing mark-ups.

More simple way. You buy the merchandise and then you determine the selling price after adding the purchase price with a number of mark-ups, such as the formula below:

Purchase Price + Mark Up = Selling Price

So this is a mark-up price in excess of the purchase price. Examples like this. Suppose you have a shoe store adventure. You buy shoes adventure brand "X" for 300 thousand. Then you want to gain 50 thousand, would you sell 300 thousand + 50 thousand = 350 thousand. Simple, right?

So can you earn profits from some of these mark-ups. Why only some? Because you have to issue a number of costs "other" such as transport to buy shoes that you'll get from most of mark-ups.

3. Break-even Pricing (Break-Even Pricing)

Is a way of setting prices based on market demand and is still considering the cost. Your business can be said to break even in a state where you received income equal to the cost, assuming that your selling price already set.

According to this method, your business will earn a profit if you achieve sales above the break even point and the loss of your sales are below break even point.

How to break-even pricing is you can apply by using several "terms" certain, namely:

* The entire cost of your business can be classified into variable costs and fixed costs.
* All the goods that you produce will be sold.
* Fixed variable cost per unit.

Confused huh? Same time, he .. he .. he .. If you want to know details, please read my article about what it fixed and variable costs and how to determine the break even point or break-even point.

Complete one, with examples of calculations. So, do not miss it ... God willing, later on you will understand how to determine your product with this method.

4. Determining the Relationship with Market Price

If you use this one, you are not pricing based on cost, but quite the contrary. The price that determines the cost for your business.

You can set the price equal to market price levels in order to come to compete, or can also set higher or lower than the price level in the competition. Depending on your market segmentation strategy and, ok?