[AccessD] OT: Pricing Method ?

Hi Robert:

There is no right-way. My specialty is POS applications and clients ask for
any number of ways to establish the markup on products.

1. An arbitrary amount. Then the margin is assigned. 
2. Percentage: As the product increases in prices a flat percentage does not
work. Sometimes a client has requested a incremental series of steps or
break points when applying percentage margins against products.
3. If the client sells a group of products of a similar value it is easier
to just apply a fixed margin.
4. Sometimes if a client has really done their research they can calculate
their monthly projected operating cost and then a margin/percentage can be
applied to create projected monthly sales. (Bigger companies use this method
but most small businesses just wing it.)
5. Some businesses just go with the Manufacture's suggested retail price and
then the margins can be all over the map.
6. Many businesses are either full or partial fiancées and they tend to take
the pricing queues from their parent or partner company. ... But can get to
charge what ever rate they want on some specialty products.

The basic rule-of-thumb is one third principle which recommends 1/3 cost for
product purchase plus 1/3 cost of running the business and 1/3 for
profit/taxes/extra expenses/growth.

This is a long way to say that there is no right way to establish the
selling price. It can be a business model that uses high-markup and lower
volumes or low margins and higher volumes.

Using the method of applying Average Cost would only work if all the
products the store sells are of a similar cost. Most businesses tend to use
a method similar to your last suggestion.

Businesses like to be able to set a default method to establish their base
selling price for their product and I would give them a number of algorithms
to select from but then they want to go in to the view the calculated retail
prices of their product lines and make arbitrary changes.

As I see it there is no wrong way but if you are writing an application for
a client be assured that they want choices.

I hope this helps, does not confuse and has not strayed too far off the
subject.
Jim         

-----Original Message-----
From: accessd-bounces at databaseadvisors.com
[mailto:accessd-bounces at databaseadvisors.com] On Behalf Of Robert
Sent: Saturday, November 04, 2006 7:16 AM
To: 'Access Developers discussion and problem solving'
Subject: [AccessD] OT: Pricing Method ?

 

This is probably a stupid question but.....

When calculating the selling price of an item, say by margin, do you
calculate based on the current received cost, or does one take the average
cost (of previously received items) + the current price and then perform the
calculations?

Total = AverageCost / (1 - m_dMargin)

Or say 

Total = RecievedCost / (1 - m_dMargin)


Another question....

What do you think is the best method of pricing an item in a Service
Oriented business. The business would sell both labor and components..


Thanks
Robert 

--
AccessD mailing list
AccessD at databaseadvisors.com
http://databaseadvisors.com/mailman/listinfo/accessd
Website: http://www.databaseadvisors.com