Pricing
Pricing is not an exact science and is a constant learning process.
- Understanding the true cost of producing your product
- Understanding what the market will pay for the product
- Deciding on where in the market your price will position you - as a premium, value or discount product
- Pricing is not an exact science and is a constant learning process.
If you have spent time understanding how much it costs you to produce your product this means you will:
- Have the information to ensure you can sell your product for a profit
- Know how much you can reduce prices to get a sale without selling at a loss
- Know when you can give volume discounts
- If you have more than one product in your range, know which ones are the most profitable
Poor costing/pricing can result in:
- Underpricing and loss of profit
- Overpricing and loss of sales
- Taking on jobs that are unprofitable (in fact cost you money)
- Offering discounts that lead to loss making
- Poor cost control, including excessive overheads
- Operating below capacity
- Unprofitable products being pursued
Ensure you discuss the costing and pricing of your product with your accountant before going to the market.
Want more information?
When working out your pricing you must take into account the different channels of distribution you are considering using. You cannot use one price for all. You must work out your pricing ensuring that if you use a distributor there is enough margin so everyone can make a profit.
If you are selling direct to a retailer (i.e. not using a distributor), the money you make must cover your time, effort, samples, freight and replacement stock.
If you are selling products via your own factory outlet, but also have distribution to other retail outlets, you must be careful not to undercut the retailers. This is why many factory outlets carry stock that you cannot buy elsewhere. This way there is no direct comparison between your outlet and the other retailers.
How has the SA Food Centre helped others?
There are many examples of assistance offered to South Australian food businesses.
Flyers
Ferguson Australia
La Cas Del Formaggio
Who can I contact?
The SA Food Centre is on hand to assist food businesses. In contacting us, we can provide advice on pricing and assess your business needs.
- Page last modified: November 15, 2011, 5:51 pm
- Welcome URL is http://www.safoodcentre.com.au/
- This page: http://www.safoodcentre.com.au/consumers/pricing
