Page 100 - 597 Business Ideas You can Start from Home - doing what you LOVE! (Beginner Internet Marketing Series)

Step 5: Manufacture Your Idea into a Product 91

points and the retail pricing (what the consumer pays) of similar
items. We are all in business to make money, so you don't want
your great product to fail because the pricing is off. Better to make
a small margin on larger quantities than try for a huge margin and
sell only a few. Your pricing will depend on your costs and your
margin.

How to Calculate Cost

One general way to calculate your wholesale price is to add up
the following three things:

1. Cost of materials per unit (such as fabric, labels, thread)
2. Cost of production per unit (such as cutting the fabric,

labor/sewing contractor)

(The cost of both materials and production will give you your
breakeven point.)

3. Profit margin (The amount of money that you need to make
on top of covering expenses. This number will also need to
cover a portion of your fixed business costs such as phone,
office supplies, and so on.)

Let's say the wholesale price point will be $6.25. Stores will
mark that up at least 100 percent and retail it for upward of $12 . 50.
(Don't forget, you will charge separately for shipping and handling
to customers. The "handling" part can help to cover your cost of
boxes, tape, labor.)

Price Tactics

Once you've got your "magic number," you could initially try
selling at a higher wholesale price than the formula gives you, to
see if the buyers will purchase at the higher price. They know their
market, and will tell you if you're off.