Tuesday, October 7, 2008

Business studies coursework: Opening own business - need help with pricing strategies? -

I have decided that I will add a fixed percentage to the wholesale price of my products that I will sell, and I was wondering what a sensible percentage would be. I m selling Wedding and Prom dresses so they are expensive products:) x

you need to base your percentage onyour cost + decent margin could be up to 5%

you need to work out what your costs will be (not including the products).Then work out what you expect to sell in a given time period and proportion the costs to that period.so say you costs are ��500 a month and you expect to sell 2-3 dresses which costs ��300 each. for 2 dresses to sell, the total cost would be ��500 + ��600 = ��1100 therefore you would need to add on at least ��250 (2 x ��250 = ��500 costs) margin per dress in order to break even.If you sell 10 dresses, then costs + product cost = ��3500 , to break even you would have to sell the dresses at ��350 each which is a ��50 margin obviously the fixed cost of ��500 a month wont change and if you expect to sell a lot more dresses a month then you can bring the margin down to a more acceptable level. the main thing to work out is the costs and the number of dresses you expect to sell and obviously how much profit you wish to make and add this on top.

It also depends on what prices your competitors charge. So you need to consider the cost, margin and competition.

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