As I am speaking to more and more of you budding Entreprenettes, I realize that understanding the true cost on your product(s) is a real problem for everyone as you really just don’t know exactly what to include……and therefore are underselling your products and loosing money and profits. I want to turn that around for you right now!
Some of you are probably asking yourself the following:
Ok, I want to get everyone on the same MONEY making page and make sure you are doing this correctly. So here are some ways you can investigate, add and properly price your products to make money and be PROFITABLE.
Now, you are going to add ALL these numbers up to get your ACTUAL cost of goods.
Ok, so let’s say the items costs $25. Now multiply that number by 2.5 to get the wholesale cost – this is the price that you will sell it to other STORES. They will then mark it up again and sell it to the end user. 25 x 2.5 = $62.50 = Your wholesale price.
If you are selling this item yourself on your website you have 2 options.
If you choose #2, then take your wholesale price of $62.50 and multiply that by 2.2 which is an average store mark up. So $62.50 x 2.2 = $137.50
So your retail price is going to be $137.50
The reason the cost is marked up 2.5 is to cover your overhead! This includes your sales reps commission, marketing (which some of you know I suggest spending 10% of your annual GROSS on marketing and not a penny more), reordering product, and your salary! If your product is coming out REALLY well priced and you feel you can sell it for more than 2.5 x cost then GO FOR IT! Make as much as you can girlfriend!
Well there is one quick fix – and some longer terms ones.
I hope this helps to keep you on track and to be PROFITABLE – we all want to make money doing what we love and are passionate about.
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