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Setting item prices - How much profit do you set?

Item prices - What are the expenses to consider?

   
9:53 am on Dec 8, 2004 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member



Hello,

I would like to know how you set prices to your items. How much (percentage) of profit do you put? What expenses do you consider?

Please share your views.

Habtom

12:11 pm on Dec 8, 2004 (gmt 0)

WebmasterWorld Senior Member essex_boy is a WebmasterWorld Top Contributor of All Time 10+ Year Member



I aim at net of 35% after all expenses then charge at little more than cost for shipping.
4:12 pm on Dec 8, 2004 (gmt 0)

10+ Year Member



My porfit margian ( after all expenses ) varies between net 30% to about 37% and even less or more in some exceptional cases but for most it is between those values. Actually the factor which determines the price of a particular product does not really depend on what % of profit we are gaining from it but it depends on what are the competitors charging for a similar product in the market. More over if you have no competition then also dont just shoot up your prices keep them in a limit that it doesnot goes out of reach of the customers.
6:57 pm on Dec 8, 2004 (gmt 0)

10+ Year Member



net between 45% - 66%. And I also charge just a little more for shipping.
2:32 am on Dec 9, 2004 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member



Bottom line profit of 35% to 65%!, it must be nice not to have any competition. We are happy with 10% profit at the end of the day.
5:21 am on Dec 9, 2004 (gmt 0)

10+ Year Member



This is a little more complicated than the answers given so far. For one thing it is important to agree on the language used: what is "net" or even "profit margin?" For another, every business is different, and competition is an especially,extremely important factor in setting a sell price.

In the US it is an old rule of thumb that retailers typically take the cost of the goods sold to them and markup 100%. ie: they sell something that costs them $10 from the manufacturer, for $20. That sounds like a lot, but it really is not, once you figure in a typical store's expenses, for rent, labor, utilities, bank charges for each sale, and advertising and etc. Anyway, as competition as become ever more fierce, I'd say the typical markup is less these days. It all depends on the business you are in, and your competitors' prices, but speaking from about 5 years experience on the Internet - You should markup from whatever the cost to you is to buy and ship the product so that you are showing at least a 42% gross profit on each sale including shipping (emphasis on gross profit). If a product costs you $25 to buy it, and $8 to ship it ($33) you should charge 1.58 times that or $52.99 ($44 for the product, $8.99 to ship) (round up to higher price) which yields you a 42% gross profit on the total sale price (product and shipping) of $19.99.

If after you subtract all your other expenses (labor, advertising, license fees, telephone costs, bank charges for each cc charge, loss taken on returns) from that gross profit of $19.99 you might be lucky to show a 10% - 15% final, net profit -- which in my definition, is the money you can put in your pocket after each sale and all expenses are figured.

5:39 pm on Dec 9, 2004 (gmt 0)

10+ Year Member



Exactly - webstart is correct.
3:34 am on Dec 10, 2004 (gmt 0)

10+ Year Member



In most countries you pay tax on the net profit.
3:37 am on Dec 10, 2004 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member



I can tell you guys don't work in the travel sector! :)
5:55 am on Dec 10, 2004 (gmt 0)

10+ Year Member



re antirack's comment: "in most countries you pay tax on the net profit"

........ yes you do, so perhaps I should have ended with (before whatever taxes you owe on your profit and pay to whatever country you live in) ? Otherwise I do not get the comment. It's pretty much understood in the business/accounting world........ ?

7:57 am on Dec 12, 2004 (gmt 0)

10+ Year Member



It depends on the merchandise you sell. Every category of merchandise has its own guidelines. For example, while a retailer of jewelry might mark up 200-300%, a (example) retailer of brand new computers does not.

And those are your guidelines.