The Safety Net and Small Business Pricing Decisions

Monday August 8, 2016

Dear Nettie @ TheSafetyNet

RIFT Accounting have been so helpful in getting my company incorporated and all my ‘ducks in a row’ so that I can start trading. I am now stuck on pricing and wondered how you can help me with this – any help would be appreciated.

Look forward to hearing from you



Dear Henry

Firstly you are very welcome with regards to getting you set up, and I’m pleased you have your ‘ducks in a row’…

Pricing, now there is a subject………

Firstly there are some decisions to make!

For instance where do you want to ‘sit’ in the marketplace?. If you want to be the cheapest then you need to have a bit of a ‘stack it high and sell it cheap’ approach. If you want to be the expensive end of the line, then you must have more of a focus on customer service and quality – if you want to sit in the middle, then you need a bit of an eye in each camp, and also accept that this is often the most competitive place to be!

Whichever way you decide, the main consideration is, are you making a profit?

It is so important that you consider what it is actually going to cost to get your product to market and make a profit margin on top.

So things to consider would be; marketing costs, staffing costs, storage costs, admin costs, shipping costs, premises costs etc etc.

Then you need to think about how much will it cost you to buy your raw materials, will there be any assembly costs, what will the product range be, will there be different colours, sizes, and so on

Now it becomes a case of working out the cost of each unit you will sell

Next work out the profit you would like to make on each unit (ensuring that you remain competitive in the area of the market you wish to sit), making sure you leave yourself a margin in case some of this stock remains on the shelf for a while.

Now not only will you have a price, but a formula that you can use going forward.

Hope this helps, just remember one step at a time, and give us a shout if you want any further help.

Good luck – you are nearly ready to take on the world!


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