It can be difficult to determine how much to charge for a product or service. If you set your prices too high, you might price your customers out of purchasing from you, however, you can also affect your profits if you set your prices too low.
Calculate your price
Successfully achieving the right price can also help you position your business/products within the market and meet profit goals, so it's important to consider pricing as part of both your finance and marketing strategies.
Read the following to help you calculate your price:
- Researching and analysing pricing influences.
- Determining your pricing objectives.
- Selecting your pricing strategies.
Calculate your costs
Before you calculate your price it's useful to calculate how much it costs to produce or deliver your product/service. When coming to a figure, always consider the cost of producing your product or service as well as your overheads. Don't forget to also factor in Goods and Services Tax (GST) and other relevant taxes in your costing.
Once you know the true cost of your product/service you can then start analysing other influences and set your objectives and strategies.
What to do…
- See our Finance & accounting topic for detailed guidance on financial management.
- Read our Pricing strategies page for ideas on how to set prices for your products or services.
- Calculate the GST in your prices and costs with the GST calculator on the MoneySmart website.
- Have a look at Austrade's Export pricing page for advice on pricing your products or services for the overseas market.
- Read our Goods & services topic for more information on product labelling and providing good customer service.