Question

Some time ago my mother in law came to visit us. While visiting, I noticed her talent in knitting beautiful woolen scarves. I asked her if she was interested in selling them in our boutique (www.maranfashions.com) and she agreed. I told her that she would set the price and she could enjoy all the proceeds. She agreed to $40.00 per scarf.
One month went by and my mother in law called and was curious to know how many scarves we sold. Unfortunately, I told her, we only sold one. Now...in light of our chapter readings, what would you set the new price at in order to sell more scarves?  

Answer 1

Fixing of selling price depends on

• You need to find out how much customers are ready to pay and how much competitors are selling for. You can then decide whether to match or beat them.
• Cost-plus pricing is one of the most using techniques, which is calculated by adding a mark-up percentage to costs. However, this will vary between businesses.
• Determine all direct costs, then calculate your variable costs. Work out what percentage of your fixed costs such as rent, rates. Add all of these costs together and divide by volume to produce a unit break-even figure.
• You'll need to know your market well to set a value based price.

I hope this will help you.If requires clarification,you may comment below.