Full Version: Pricing name badges
From: Dave Jones (DAVERJ) [#28]
9 Mar 2007
To: PenTrophy (PENINSULATROPHY) [#21] 9 Mar 2007
The meter doesn't just start running when the customer comes in the door. It's always running. If you spend half your time taking orders, buying materials, etc... and the other half engraving stuff, and you only charge for the actual engraving time without somehow calculating the rest of the time into the cost, then you'll go broke. Even faster if you have to pay somebody else to take the orders, buy materials, etc...
You need to figure all of that extra time as either part of the job or part of the overhead. Either way it needs to be calculated into the cost of that job.
I've seen a lot of small companies fold where the peope were working 60 hours a week, had jobs coming in, but ended up with nothing in the end because they weren't calculating their true costs into the bids/quotes.
From: Doc (GREAT_ATLANTIC) [#29]
9 Mar 2007
To: Dave Jones (DAVERJ) [#27] 9 Mar 2007
Ahh! It just dawned on me where the disconnect is with this thread. The $.01 calculation isn't an overall assignment based on time, or part of a formula to determine pricing....it was simply a product of this particular item based on its total cost in backing into the justification of a retail price. That overhead assignment changes for each product value in this direction. It wasn't meant to represent an absolute in determining pricing for all products, but rather as a component for the overall profitability of this one item at $5.25. We've essentially gone in two separate directions in this discussion.
In other words, we don't assume that the $.01 covers a specific time in production....it assumes that given fixed costs versus total gross revenue, $.01 of the $5.25 represents overhead. That factors all production at different margins, price points, production requirements, etc. And depending on an operation's total gross sales, that number either increases or decreases.
In the larger picture, outbound pricing based on overhead is absolutely necessary....and I certainly wouldn't attribute only $.01 to the equation regardless of production time, given our fixed costs.
From: Peter [#30]
9 Mar 2007
To: ALL
Hi Doc,
Yeah Adeaide is only a smallplace. It certainly isnt Manhattan. We have only 1,250,000 people here.
But at the sametime, we have a plethora of engraving companies.
We have never subscribed to " cheaper means more, business school of economics"
Capitalism , democracy, competition and the magic ingrdient...Marketing are well and truly alive here in Australia..
regards
Peter
From: Doc (GREAT_ATLANTIC) [#31]
9 Mar 2007
To: Peter [#30] 10 Mar 2007