In this, you will discover how to smartly set your prices as a new brand owner. A well-thought-out price not only helps present your products with value but also strengthens your bottom line.
Why is your price so important?
Correct pricing is crucial because it directly affects how customers perceive the value of your products. Your pricing strategy can also help you work more efficiently, for example by smart purchasing and optimising logistics processes. This is where a tool like KairosFood comes into play, by helping you group deliveries, which saves time when stocking.
Get started with your cost-oriented pricing
Step 1: Calculate your cost price
The first step in setting your selling price is to calculate the cost price of your products. This includes all costs directly related to producing and preparing your product for sale:
- Material costs: The cost of ingredients or raw materials.
- Production costs: The cost of making the product, such as cooking or assembly, including labour hours.
- Administrative costs: Costs such as rent, utilities, and administrative support needed to run your shop.
Step 2: Add a profit margin
After you have calculated the total cost, add a profit margin. This margin is essential to make your business profitable. The size of the margin depends on factors such as market competition, the perceived value of your product among customers, and your business goals.
Step 3: Consider additional retail costs
Besides your direct production costs and profit margin, you should also consider other costs that come with running a shop:
- Staff costs: Costs for the staff working in your shop.
- Marketing and promotion: Costs to advertise and promote your product.
- Overhead costs: Other overhead costs such as insurance and taxes.
Step 4: Determine the final selling price
Add up all these costs to determine your final selling price. This is the price you charge consumers. It is important that this price is competitive but also sufficiently high to cover all costs and ensure a healthy profit.
Step 5: Evaluate and adjust
The set sales price should be evaluated regularly. Market conditions, customer behaviour and costs can change, so it is important to be flexible and adjust your prices when necessary to remain competitive and profitable.
In this blog, we have gone through the crucial steps needed to shape your pricing strategy as a new brand owner. A well-thought-out pricing strategy ensures that your products are not only presented with value, but also contributes to a stronger business. Correct pricing directly affects how customers value your products and is essential for optimising your operational efficiency.
We have seen how important it is to accurately calculate the cost price, including all variables from production to administrative expenses, and how you can establish a competitive but profitable selling price through a smart profit margin and managing additional shop costs.
However, the work does not end here; pricing strategies require constant attention and adaptation to market changes to be truly successful. For more detailed information and further resources, we invite you to download our action guide here below. This guide offers comprehensive insights and practical tips to continuously refine and perfect your pricing strategy.