Pricing: How can the selling price be calculated?
Self-employed, freelancers, founders and entrepreneurs: They all have to be able to be in the position, regardless of their exact legal form and the company standards Sell price - for services as well as Products. Here you will learn what it matters on how a pricing formula could look practically look and over which stumbling traps in particular inexperienced founders often fall.
First of all the basics of pricing
If you want to calculate the price, not only does a role play how much you can ultimately make or want to earn. The final price, both in the B2B and the B2C market, is based on a number of factors, Not all of them are in hand. So you also have to involve what prices the competitors offer comparable services and products. In addition, you must remember that the difference between the entire cost expense and selling price is the profit, which is still taxable. Imaginary is inevitably necessary. Likewise, it is not forgotten, especially in the B2C market that Germany has a value added tax of 19%. Which does not affect your net prices and is not a money you deserve, but probably an extra charge for the consumer.
Avoid typical sources of error if you want to calculate the price
Initial has already been indicated that there are quite stumbling traps that inexperienced entrepreneurs rarely successfully maneuver. Get a lot of Individual aspects of pricing not taken into account and only fall on when it's already too late. Below we want the biggest and most serious sources of error In the price calculation formula, and you help you to avoid if you want to calculate the selling price.
# Costs accidentally overlook
Founders happen again and again that they notice individual costs only if they already tore a hole in the profitability of their own company. Which ones are, is different from industry to industry. Insurance could count, but for example the filter change in your Mr beam or bought design you need to laser and engraving. You should also take into account the time factor of your laser jobs and the output. A properly performed price calculation as a formula is very complex, so you should have enough time.
# I do not calculate missing times in the price
Even as a self-employed, you will be sick or do you want to take holidays. During this time you sometimes merge, especially as a solo-independent with their own services, no more money. Likewise, you could be sick, maybe even longer. Such absences must be settled with for the time you work actively, you're already compensated for a precaution.
# Decide out of the gut feeling out
The Sell price, is not groundless a necessity. Who just appreciates, rarely meets the exactly right price. Either are you selling or your products undervalue, or you set the prices too high, then the demand remains. Of course, you have to capture exactly in advance.
# In particular in the beginning times causing too high costs
Who is not constantly in personal customer contact, sometimes does not need an expensive inner-city office, but prefer to work out of the domestic four walls. Also, costly marketing expenses or expensive company cars are sometimes out of place in the early days. A high selling price Can not compensate exorbitant high costs if he is no longer competitive.
How to go if you want to calculate the selling price
First: the Exact price calculation formula is very variable and industry dependent. A freelancer web designer sometimes has completely different positions in this as, for example, a hairdresser. The latter requires a separate salon, products and tools must be shopping, while the web designer often works completely without a office and "only" requires his computers along with software, which once purchased often can be used for years.
Step 1: Target group analysis
To determine your target group is absolutely necessary if you want to calculate the price. Finally, you have to know who buys your services and products later and how much this target group is ready to pay for it. Your Target group is one of the most important points if you want to calculate the selling price. For example, you really offer exclusive, expensive products for a buyer layer with very good income, make your prices automatically differently than if the possible buyers are rather low-income households.
Step 2: Competitive analysis
If you want to calculate the price, you will find that you usually are not alone on the market. At best, this applies to (patented) inventions. As a rule, however, your services and products are offered by (many) other companies. You should therefore watch out exactly their pricing and these findings in yours Own pricing formula include. You have good chances if you can beat their prices - but that only works by expanding fewer costs themselves.
Step 3: Cost Calculation
From a computational view of the most important part, if you want to calculate the selling price. The selling price must eventually cover all costs and also contain a margin, which is later your profit. What costs occur in your calculation differs after the Product, performance and industry.
The above-mentioned web designer has very manageable costs: calculator, software, further advertising costs already capture most. The barber is different if he wants to calculate their own price. He has a salon rental, furnishings, costly coloration, many instruments he needed for his work, higher energy costs and, if applicable, employees.
In the Cost calculation, Among other things, you should think of these positions:
- Personnel costs
- Distribution costs
- Development and production costs
- material costs
- administrative expenses
Step 4: Margin calculation
You yourself "feed" from the margin, the difference between all costs and the selling price. Note that you have to tax the profit, in Germany with a significant tax rate. Paired with other costs, such as those for the tax consultant, you can make a flat rate about 40 to 50% of the profit margin only for taxes and associated costs. What remains, must be enough for you to live.
An example of how you Calculate selling price for a product can
Material costs: 15 EUR
Production costs: 5 EUR
= Production costs: 20 EUR
Administrative, sales costs and every time (pro rata hour rate): 20 EUR
= Self-cost 40 EUR
Profit margin 50%: 20 EUR
Sell Price: 60 EUR + Separate VAT
Who offers any discounts, of course, must also consider it. To calculate, the selling price is therefore always individual and not least dependent on the industry. In addition, companies need to plan many more positions, such as credit costs, in the total cost of calculation. The complexity requires sufficient attention to the pricing formula - even because you do not want to pass on significant price increases to existing customers directly in the first or second year.
Weitere interessante Artikel
Appreciative communication is a matter of course for us at Mr Beam. 🧡 Learn more now! Read more
Are you interested in being self-employed? Then read the article on how you can start a part-time business without risk! ✅ Read more
In this guide, we give you tips on how to build your own business with personalised products. ➡️ Go to the guide! Read more