CHAPTER 11pricing and process

HOW MUCH SHOULD you charge for your product or service? In theory, you know you want to make a profit, so that means you need to charge more than it costs you to make and deliver your product or service. But in practice, it isn’t as easy as it sounds to determine the right pricing structure for your business.

Finding the Perfect Price

Pricing a product is a little easier than pricing a service because there are hard costs associated with the production of the product, leaving fewer unknowns. But whether it’s a product or a service, the basic equation is:

cost + markup = retail price.

Of course, your actual cost consists of more than just your out-of-pocket expenditures. That is, your cost includes both fixed and ...

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