Do you ever wonder how to price your products or services? We get asked a lot about how to price business products and services. Below are 5 things to consider when calculating your product/service price

Tip 1: Track all Business Cost

Track all cost when pricing pictures

Tip 1- Track and include ALL costs: Whether you offer a service or product it is important to track all costs & include them in your pricing. ⁠There are two types of costs: Fixed cost and variable cost. ⁠
FIXED COSTS: Fixed costs are those monthly costs you must pay REGARDLESS of how many products/services you sell. These can include, office space rental, marketing cost (sometimes), administrative staff, utilities, etc. ⁠ To include fixed costs in your product pricing, you will need to ESTIMATE how many products/services you EXPECT to sell or produce. More on these later. ⁠
VARIABLE COSTS: These tend to be easier to track. These are costs directly related to producing ONE product. For example, raw materials cost, logistics/distribution cost, etc.⁠

 

Tip 2: Add time spent by you and your staff

Add time spent on producing the product

Tip 2- Add your work time: Time is money! Track how long it takes to produce your product and service to your price. 

Have staff? Also, calculate and include their time. ⁠

 

 

 

 

 

Tip 3: Add your perceived value

Add your perceived valueTip 3 – Add your perceived value: Your product/service price is not only driven by cost and time. ⁠Add the value of your brand, expertise, and technique. ⁠

Apple and Honor phones both provide the same service but Apple is priced higher because it is a stronger brand. ⁠

 

 

 

 

 

Tip 4: Compare your prices to competitors and market

Check competitors

Tip 4- Review your competitor’s pricing: Customers care about value and price. You don’t want to over-price your business out of the market. You also don’t want to underprice your business, leaving MONEY on the table⁠.

 

 

 

 

 

 

Tip 5: Include Sales Tax 

Include Sales TaxTip 5- Add your tax: Don’t forget your taxes! At Vencru, we get asked a lot but how to handle customers that don’t want to pay taxes. Adding the taxes into the product/service price will solve this problem. ⁠

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Your Product and Sales Price:

Therefore: your product or service price is a combination of all your cost, time spent, perceived value and sales tax 

Product Price Formular

Vencru is a free invoicing and accounting tool for small businesses. Send invoice, track inventory and review business financials from anywhere. Get started with the Android App (iOS coming soon).

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