Personal Development, Business, Finance, and Investing for Everyone
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If you are just starting a business, you must know how to price your products to sell. The correct pricing of your products is essential to the success or failure of your business.
The amount to be added to the investment/capital to generate income.
It is the combined investment/capital and mark-up, the price of the product to the customer.
Why is this important?
If the product is not priced correctly, it can cause losses.
How to properly calculate Mark-Up and Selling prices?
Did you know that there is a correct formula for computing mark-up and selling price?
Calculation of Mark-Up (the amount to be added to each product)
Investment of each product/item x .20 (the percentage you apply, which is up to you) = Mark-Up
Calculation of Selling Price (the price of each product when sold to the customer)
Investment of each product + Mark-Up = Selling Price
I have a twenty percent (20%) mark-up in the store. Then I will price the pack of candy with fifty pieces.
One (1) pack of candy (50 pcs) = Php 70.00 (investment or price of the product)
Php 70/50 (pcs per pack) = Php 1.40 (cost per item/investment per item)
1.40 x 0.20 (the percentage you apply, which is up to you) = Php 0.28 (Mark-up)
0.28 + Php 1.40 = Php 1.68 or Php 2.00 (Selling Price)
But remember that the mark-up varies depending on the product. More often, the mark-up is higher when it comes to food. Also, don't forget how much the market price is for a specific product.
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ABOUT THE BLOGGER
Hi, I'm Ralph Gregore Masalihit!
An RFP Graduate (Registered Financial Planner Institute - Philippines).
A Personal Finance Advocate. An I.T. by Profession. An Investor. Business Minded. An Introvert. A Photography Enthusiast. A Travel and Personal Finance Blogger (Lakbay Diwa and Kuripot Pinoy).
Currently, I'm working my way toward time and financial freedom.