How to Calculate and Determine Product Selling Prices

In the midst of intense business competition today, business actors need to have a mature business plan in order to win market competition. One of step the important foundation in building a business is determining product selling price.

The selling price of the product needs to be considered carefully because it will greatly affect various aspects of the business. Business actors need to make calculations that best suit the scope of your business and target customers.

Therefore, it is important for business actors to understand how to calculate and determine the right selling price for their business products. So, how? Check out the following reviews.

Steps to Calculate Product Selling Price

Basically, the selling price is the final amount or nominal charged by a business to its consumers. In determining the right selling price, business actors need to have clear benchmarks, so that they can benefit the business,

Determination of the selling price of the product can be determined from the calculation of costs that become business capital. There are two cost factors that can affect the determination of a product selling price, including:

1. Fixed Costs (Fixed Costs)

Fixed costs are business costs whose amount is not determined by the volume of company activities. Fixed costs include employee salaries, building rent, machine maintenance, electricity bills, and so on.

2. Variable Cost (Variable Costs)

Variable costs are business costs whose amount is in accordance with the volume of business activities. Costs that are included in variable costs, such as raw material costs, employee overtime wages and so on.

Apart from the above factors, the determination of the selling price of the product can also be determined through various calculation methods, as follows:

• Cost-Plus Pricing

Determination of the selling price using the cost-plus pricing method is determined by adding up the total production costs per number of products, then adding the profit margin according to what you want to obtain. The calculation formula is:

• Mark Up Pricing

The next method is mark-up pricing, where the calculation is by adding capital or the purchase price of the product with the profit to be obtained. The calculation formula is:

• Break Even Pricing

Calculation method with break even pricing namely by prioritizing production costs and also market demand to determine the selling price of the product. The calculation formula is:

• Keystone Pricing

Determining the selling price of products with this method does not use a special formula. The calculation method is only by increasing the price of the product using the initial markup 50% to 100% of production cost.

• Manufacturer Suggested Retail Price (MSRP)

This method does not require calculation because the cost of goods has been determined by the association of business people in the same or equivalent industry. Usually, it is carried out by the manufacturing industry that makes motor vehicles, electronic products, and other products.

• Market Based Pricing

This pricing method based on market prices is almost similar to the MSRP method. the difference, market-based pricing determined naturally in the market, not based on the agreement of a particular association. It is enough for business people to follow the general price in the market.

• Value Based Pricing

Determining product prices with this method is relatively more difficult than other methods. This is because the price of the product is determined based on the value of the product, like a distinctive value that other products do not have. Generally, this method is used to determine antique collection products such as works of art.

Business Product Pricing Support Application

Amidst the shopping trend online At present, people can easily and quickly obtain product-related information sources through various sources on the internet plus or minus business products can be easily read.

That way, business actors need to be smart about their business strategy by providing the right price for consumers. Not only through formula calculations, business actors can also determine product selling prices with the help of supporting applications, such as:

• Price Comparison App

When wanting to buy a product, both goods and services, consumers will generally find out information related to the product first, starting from the type of brand, uses, weaknesses to the price of the product they are going to use.

As a reference, business actors can observe business competitors who have similar products. Compare product prices on the market as an illustration to set the most appropriate price. There are also several price comparison applications that can be used by businesses, including: iPrice, Priceza, Pricebook and its kind.

• Finder Application Supplier

Determining the right product selling price is the amount that is not too high, but not too low either. If the price is set too high or low, the business will lose money.

Losses due to the selling price of the product usually occur due to an error in calculating the cost of goods sold (HPP) or the company is not good at doing research beg, thus obtaining expensive staples.

Several applications that can be used by businesses to find beg in various business scopes, including: Evermos, RateS, Grosiraja, Idejualan, Raena and the like.

• Accounting Application Online

After determining the right selling price, businesses can monitor and manage their business finances with the application online accounting. Online accounting applications such as Journal by Mekari, Accurate, Kledo and the like, can help businesses minimize potential business losses.

That's how to calculate and determine the right selling price for business products, along with tips on using business support applications for businesses.