Pricing your product right at the start

From Venture Beat

Pricing your product right is one of the most important decisions you must make.

You cannot price yourself too low, so that you lose, or price you out of the market.

l. Pricing too low means you can not recover your cost.

2.  Pricing too low cant make you raise your price later on;

3.    Pricing low may invite retaliation from the industry leaders and they can hurt you.

4.  It also makes your product a commodity and devalues your product.

Formula:

l.  Basic cost:   direct materials + labor

2.  Wholesale price:   basic cost + whole sale mark up

3.  Retail price:   wholes sale price +  retail mark up

4.  Profit =   Retail price -  cost -  overhead.

You must learn how to price your products/service right right at the start