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• #981490
RBP
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I am starting a business selling hot food at a market. I am new to this so need a little help.

I am in the process of working out my mark up for each unit of food that I sell. For example, if the cost price of materials (ingredients) is \$2, what is a reasonable price to sell at?

#1130802
Divert To Mobile
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Hi RBP,

there are 3 possible ways to decide this that I know of,

1. How much is everyone else selling it for and copy that.

2. if your product is new and no one else is selling, a guess as to how much your target would value your comodity.

3. calculate how much waste your expecting, cost of operations, units you expect to sell, value of your time, time invested and figure it out from there,

Steve

#1130803
Breevree73
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• Total posts: 112
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Hi RBP

I read a story once about a professor with a class of business students. He gave them a product, gave them the cost price, and asked them to calculate the sale price.

The students worked through potential markup scenarios, applying all the overheads and add-ons they thought were appropriate.

In the end, the professor told everyone they were wrong. The students were stunned – hadn’t they done their calculations right??

The professor replied “The right price to sell this product at is WHAT THE CONSUMER WILL PAY FOR IT.”

There is no best way to mark up a product – it depends on what your expected audience will pay.

Just make sure that you’ve covered all your costs – not just the cost of the item, but your overheads as well, and your wages – then decide just how much more than that your consumer is likely to be happy to pay.

Luckily enough, prices aren’t set in stone – if people aren’t buying, you can always lower the cost. If people are lapping it up, you might want to increase your price a little, til you find exactly what they would happily pay….

Hope that helps!!

Bree Vreedenburgh
bvint.com

#1130804
arvoApp
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• Total posts: 50
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If you are not alone selling hot food at the market maybe the first thing is study the prices of similar food sold by your competition which customers are willing to buy.

If you sell a product that is unique and unknown to customers you might want to test different pricing strategies (discount for quantities, etc.) to see which ones work.

Like another poster said, the right price is the price the customer is ready to pay given the context. For example a same can of soft drink is sold twice or more the price on the beach than in a supermarket further down the street. Beach goers are willing to pay the premium since they don’t have to get dressed, take the car and drive to the grocery store. What happens in this scenario is the customers know the drink is dearer but they pay for the convenience.

Hope this helps.

#1130805
Zava Design
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Breevree73, post: 148372 wrote:
“The right price to sell this product at is WHAT THE CONSUMER WILL PAY FOR IT.”
Apple have been getting away with it for years!
#1130806
AGMBris
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• Total posts: 319
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I think you need to consider what is being charged around you? What can you charge for the product? Then what are you prepared to accept?

Are there others doing the same thing at the same place or nearby? Will you be guided by that?

Is it a long term thing? Will you be selling at markets for the next 20 years or is it a once off thing. You may want to make more if its short term V a fair, long term price that people will talk about.

The market will dictate to you though. If you are too high, you will know very quickly and you need to be ready to adjust.

One thing I think to remember – you can always come down, moving prices up is much harder.

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