You are here: Home : 7. Costing & Pricing : How do I set a price for my product / service?

In order for you to properly set a price for your product you first need to work out how much it costs you to make. This means breaking all the pieces down so you work out what each individual unit costs you to produce.

Step 1: Work out your ‘Fixed Costs’

Your ‘Fixed Costs’ are the costs that remain the same regardless of how many units you are making. For example:

• Rental of your business premises
• Your insurance

The first thing you need to do is to work out your overall ‘Fixed Costs’ and then your ‘Fixed Cost Per Unit’.

	It’s really important that you don’t forget to include ALL costs involved with making your product. For example: PROMOTIONAL COSTS: getting business cards or posters etc. printed. TRAVEL COSTS: travel time and cost to pick up materials, drop off orders etc. OTHER COSTS: costs of telephone calls etc.

Now that you know your overall ‘Fixed Costs’ you need to work out your ‘Fixed Cost Per Unit’. To do this you need to work out how many products you plan to sell.

Remember, this information is available from your Market Research.

	Example: Your ‘Fixed Costs’ = 228 euro   You plan to sell 60 units. To get your ‘Fixed Cost Per Unit’:   Divide 228 by 60 = 228 Euro 60 Units = 3.80 euro ‘Fixed Cost Per Unit’.