Lesson Three
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Lesson Three
This can always be the hardest part of setting up your fist side hustle, you don’t want it to be too cheap that you can’t make a profit. But you also don’t want to be to expensive and no one buys it! So where do we start?
It is good to understand the different ways that a business can determine the pricing for their products/services and then pick one that suits you best!
Remember, the aim is to always ensure you cover your costs and then make enough profit that it is worth your time and effort!
Now that you know exactly what your cost is per item made, you can figure out the profit you will make based on your pricing. If you did the costing breakdown correctly, then your profit will be the total price you sell it for, minus the costs per item.
By using the percentage pricing, we use a select percentage to add to the cost of the item to determine the price. So 100% percent markup (percentage added to the cost) will give us the same profit as the cost. At 200% markup, we will get double the cost back in profit.
Add the percentage to your cost and see what the price looks like on all of your items/services offered. It if feels to high then change it, but keep the same percentage across all of your products.
This process of pricing is done by looking online at the different prices your same product/service is being offered for by other businesses. You can then get an average of what the price is for what you are making.
You can then choose a price for your product/service that sits in the middle of these other business prices to have a safe price.
It is not a good idea to always try be the cheapest price in the market. It gives the impression of a poor quality product, and it is very hard to then increase your prices over time.
By the end of this process, you should now have an idea on what pricing structure you will use!
What is the method to find competitor pricing?
