| 5:12 am on Dec 8, 2009 (gmt 0)|
We used to use Excel, basically setup so that if the cost was xx.xx to yy.yy, the percentage markup was zz%. Works OK for basic starting numbers but gets to be a pain with a lot of products that change price a lot.
| 4:23 am on Dec 11, 2009 (gmt 0)|
I use a lot of excel functions such as:
=A1*1.5+if(A1<100, 10, 5)
That way for low dollar items you will be adding extra profit to cover processing and handling costs that I don't mind absorbing in higher dollar sales.
| 9:53 pm on Dec 11, 2009 (gmt 0)|
Can you elaborate on the question? If I understand correctly, you just need Price = markup * cost
But, it seems too basic of a question. Are you trying to understand how to calculate your COGS? Adding in time value of money, inventory carrying, fixed costs such as warehousing, etc?
| 11:07 pm on Dec 11, 2009 (gmt 0)|
A proper pricing function will take into account several factors:
(a) the shipping cost you paid to acquire the product,
(b) the packaging and void-fill costs you paid to ship the product,
(c) the product life-cycle costs, including losses, damage, and non-resellable returns.
A (simplifed) formula that I've used is:
Markup = 2.475 * Cost ^ -0.16
if Markup < 1.2 then Markup = 1.2
Price = (Cost * Markup) + (0.25 * Weight)
Round to higher nickel if < 10.00, or
round to higher 95-cents if > 10.00.
| 2:07 pm on Dec 12, 2009 (gmt 0)|
I also take into account payment processing fees which applies to the sales price and shipping. For example, if the customer uses PayPal to buy your widget for $25 plus $5 shipping, that adds about $1 to your expenses ($0.35 + %1.9 to 2.9% I believe)
| 3:20 am on Dec 13, 2009 (gmt 0)|
Thank you very much, your formula is exactly what I was looking for.