How do I determine the right profit margin percentage when pricing my products?
I own an online store and I sell all types of small gadgets, electronics, and gifts.
For my price structure, how much profit should I add to my cost + overheads?
Employ ten people. Equip them with telephone directories on excel sheets with phone numbers of competitors and product names. Have the ten people call 600 competitors a day posing as a customer. Hit one state at a time. Call between 8:30 am to 5 pm. Enquire for the price, place a fake possible order. Price your product 3 cents lower than the price of the competitor.
My friend shared your question with me (How do I determine the right profit margin percentage when pricing my products?) so, I read your question.
I think this is a better and simple formula, you collect all company material data and the sum of all material price and see the total product price to decide the price of the product. Now, plus your 8% profit again to show your product and profit margin. If you are expending your company profile, please go to online marketing and create your website. If you are purchasing website domain and hosting visit $1 web Hosting. We bought the domain name and hosting.
I think its better to think in simple terms to begin with and take a look at what areas your are targeting, do some research on similar items for sale online and what prices they start at. If you have a good idea what other similar or the same products are being sold at you can decide on an accurate figure which means you will be able to compete with the competition. The next step is evaluate what it costs you, what are the total costs to you to buy in the products or make the products including rental and anything else necessary to provide that service. We also sometimes get confused about including any time spent on selling that product but if we work alone, don't worry too much in the early days of including your time spent. if you have staff thats a different matter, you will have to work out how much you are paying your staff and how many items being sold etc. I hope this helps a little.