Month: January 2020

If your biz is one that creates and sells products, you're going to have two types of business expenses to deal with.

 

Fixed costs are the ones that are always there - whether you sell a ton of products or sell none at all. These are costs like your internet, your equipment, your studio/office/store rental. Your fixed costs are important because you need to cover them month over month.

 

pricing products for profit formula

 

With product-based businesses, you also have another type of cost, which isn't as as simple to deal with. These are called variable costs. Your variable costs are those that vary depending on your production. They go up when production goes up and down when production goes down - they're the costs that are tied to creating and selling your actual products (materials, shipping, transaction charges, etc.). These can be a bit more complicated to deal with when setting your prices because, well, they're always changing!

 

To price your products, you need to know both your fixed costs (the expenses you have in your biz no matter how many products you are selling) and your variable costs for your products.

 

Your fixed costs will tell you the min $ you need to make per month to break even, which is the first part of your pricing formula. To cover these, you want to consider realistically how many items are you going to sell in a month and then divide your fixed costs by that. Any products you sell on top of those, that becomes profit (happy dance)!

 

And then your variable cost per item is the next part of your formula (since you want to cover costs of a product in the price as well).

 

Then sprinkle more on to turn that pretty profit.

This profit sprinkle can either be your time cost (the amount of time it takes you to make an item at the hourly rate you want to charge) or it can be a markup. A standard mark up is 50% (or a 100% increase on the costs).

 

A formula

product price = (fixed costs/number of products realistically sold in a month) + (variable costs - how much it costs to produce that item) + mark up or time cost

 

Let's look at an example:

fixed monthly costs = $250

cost to produce an item (materials and transaction fee) = $25

time it takes to produce the item = 3hour

hourly "rate" = $25/hour

realistic sales goal = 25 items/month

 

Pricing formula using time cost for profit:

($250/25)+$25+(3*$25) = ($10)+$25+($75) = $110

 

Pricing formula using 50% mark up for profit

(($250/25)+$25)*2 = ($10+$25)*2 = $70

 

 


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Struggling with pricing your services?

 

You are SO not alone.

 

The thing is, pricing is a complex thing with many factors to consider. Especially when you're selling services - you might not know how much time a project might take or how to charge your client.

 

tips for pricing business services

 

The best way to price service-based projects is with a project fee (NOT an hourly fee). After all, no one wants to pay hourly for things since they don't know how many hours something will or should take.

 

So, how do you set your Project Fee?

✨The easiest formula is number of hours * rate per hour. Based on the number of hours you expect the project to take, use that number multiplied by your rate.

✨Use a different hourly rate for different parts of the project (project management vs. strategy vs. revisions)

✨When setting your hourly rate, consider your level of experience and the market price. Take a look at what competitors in your area are charging and then adjust for level of experience. Also consider what is a minimum per hour you want to get paid.

 

My general rule is if I am learning something new and spending time looking at youtube tutorials, etc. I don't charge for that time. If I have to redo a bunch of stuff because in my learning it I didn't get it quite right - I don't charge for that time either. Or, if it's mostly active work but a lot of learning along the way then sometimes I'll charge half my rate.


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Let 2020 be the year where you know exactly what content to create to promote your business. Where you connect with your Dream Customers, grab their attention, and stand out in a busy busy market.

 

To get you there, you need a brand story!

 

what is a brand story

A brand story builds and shares the vision and purpose of your business. It brings to life the passion, the spark, the imaginative idea that’s at the heart of your business and gives it shape.

 

A story tells the beginning, middle, and happily ever after of your business – it tells clearly and beautifully:

  • why you started
  • where you’re going, and
  • how you’re going to get there.

 

Everything you do in your business goes back to your brand story. The products and services you choose to offer, the customers you focus on, how you market to your customers, the colours you use to bring your brand to life, the staff you hire, the writing on your website…all of this is rooted in and guided by your brand story.

 

Ready to write your brand story?
Enter the 5-Step Model to Build a Powerful Brand Story Challenge.

Over the course of 6 days, you’ll get video trainings, a workbook, daily challenge prompts, and mindset block busters all designed to walk you through creating your own compelling brand story.

The best part? It’s free! Like, totally completely free. And it starts on January 27!


free brand story challenge for businesses


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