The case for calculating a Selling price for your products.
Let say you want to open a Specialty store like the one you saw in the town you grow-up as a child. The store still selling the same specialty products and they have been in business for over 25 years in the same town. You liked the store so much that you think you can do the same in your neighborhood and you are sure you can make some money selling the same products. Well, after all, they are the same products and people have been buying these products for decades. You open your new store and repeat everything you saw, but after the three years you find out that you sold as many products as the other store but you are loosing money and you can't keep the store open. What happens? Why my store sell as much as the other one and I can't keep my open any longer?
Many reasons, but maybe is that your cost structure does not allow you to sell at the same price the other store is selling their products. And, I am not even considereing discounts, tax strategies, salaries, cost of leaving, and other considerations- 'cause they are multiple factors.
It all boils down to good recodkeeping, tax planning, cost structures, volume of sales, break-even point analysis, taxes, product mix, etc. The failure to do these calculations and adapt to changes in the environment could depend your sucess as an enterpreneur.
So, what you should do if you want to stay in business? You either have to hire an accountant (CPA) to cruntch all the numbers for you and keep him/her on the payroll to monitor your progress and help you adapt to the changes on the environment, or inmerse yourself in the mechanics of the process and forget about managing your day to day operations. Setting a price for your product based on your cost structure is paramount to your sucess.
Let say you want to open a Specialty store like the one you saw in the town you grow-up as a child. The store still selling the same specialty products and they have been in business for over 25 years in the same town. You liked the store so much that you think you can do the same in your neighborhood and you are sure you can make some money selling the same products. Well, after all, they are the same products and people have been buying these products for decades. You open your new store and repeat everything you saw, but after the three years you find out that you sold as many products as the other store but you are loosing money and you can't keep the store open. What happens? Why my store sell as much as the other one and I can't keep my open any longer?
Many reasons, but maybe is that your cost structure does not allow you to sell at the same price the other store is selling their products. And, I am not even considereing discounts, tax strategies, salaries, cost of leaving, and other considerations- 'cause they are multiple factors.
It all boils down to good recodkeeping, tax planning, cost structures, volume of sales, break-even point analysis, taxes, product mix, etc. The failure to do these calculations and adapt to changes in the environment could depend your sucess as an enterpreneur.
So, what you should do if you want to stay in business? You either have to hire an accountant (CPA) to cruntch all the numbers for you and keep him/her on the payroll to monitor your progress and help you adapt to the changes on the environment, or inmerse yourself in the mechanics of the process and forget about managing your day to day operations. Setting a price for your product based on your cost structure is paramount to your sucess.
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