Join Jim Stice for an in-depth discussion in this video Considering all of your costs (fixed, variable, and the contribution margin), part of Finance for Non-Financial Managers.
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- What can be so hard about pricing a product?…Don't you just figure out what your costs are…and then add some sort of markup for profit?…Oh, that it were that easy.…If your price is too high, regardless of your cost,…someone in the market will under price you,…assuming that the quality of product…or service is similar.…In many cases, you will be a price taker…and you will have to manage your costs…so that you can earn a profit given…a certain price is determined by the market.…Now, let me say that again.…In most instances, you don't price…your product to cover your costs.…
Instead you determine,…if given a certain market price,…you cost structure is such…that you can earn a profit.…The biggest mistake small business owners make…in product pricing is not considering and covering…all of their costs when entering a market.…Now it is true that when you are initially trying…to penetrate a market you may be willing…to lose a little money to gain market share.…But that strategy is not sustainable over time.…Over the long term, you must cover all you cost.…
- Interpret financial reports and make decisions based on available data
- Manage inventory and receivables
- Create an accurate budget
- Cost a product or service
- Analyze customers
- Understand your income taxes
- Communicate your contribution to the bottom line
Skill Level Appropriate for all
1. Understanding Finance and Accounting
2. Most Common Financial Reports
3. Techniques for Using Financial Reports
4. Short-Term Financial Management
5. Costing a Product or Service
Drafting a budget4m 59s
7. Income Taxes
Next steps1m 38s
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