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How to work out your selling price Once you have worked out your true cost price, you should take this price, and multiply it by a factor of 1.3 (in other words add a 30% markup). This 30% markup is the MINIMUM you should charge on LARGE orders. For small orders, take the cost price and double it (in other words add a 100% markup or more). If you work between these two extremes you will find the selling price level that your customers will be comfortable with. Factors that will influence your selling price and earning potential 1. Rent, Profit – Work out how many items you can print per month, then calculate how many items you need to sell to cover your rent, and the profit you would like to make (on the profit side be realistic – don’t expect millions overnight), then adjust your selling price accordingly. If your selling price is too low you will make sales but no profits and pretty soon you’re out of business. 2. Payment Terms – if you’re going to accept credit card payments, then the bank will take between 3.5 and 5% of the selling price of the item as a commission (this structure is set up when you sign up with them for these facilities). If you will be taking credit / debit cards, you will need to increase your selling price by at least 2% more than the bank is charging you, to cover these charges. 3. Advertising – although strictly speaking, advertising is a way to bring you more customers, instead of being a direct expense, the advert will in the beginning cost you money from your pocket, but as it builds (it takes 6 months for an advert to be effective), it will bring you money. 4. Location – Your location will have a direct bearing on the amount of money you should be charging. In some of the more affluent parts of the country, you can get away with charging more for the same product, that you can in poorer areas. If you are in an affluent area, charging too little will result in less sales, and not more (as people will think you’re selling lower quality products) 5. Labour Costs – The more mouths you have to feed, the higher your costs, and thus the more you need to charge. Larger companies generally charge more to produce a finished item that someone working from their garage. 6. Is this Job urgent? – If the job is urgent, and you need to drop other things to get this job out in time, you should charge a premium above your standard charges – call it an “express production” charge if you like.
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