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PostPosted: Tue Jun 14, 2011 12:34 pm 

Joined: Nov 6, 2009
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User avatarReal Value
 
For those who are really lazy and don't want to calculate prices every time they sell, a reasonable rule of thumb is to use 2x cost as a reasonable price. For the fixtures example above, 2x cost would have been very close to optimal. Sometimes, if there is not much competition, you can push prices up some to 2.5x cost, but I generally use 2x cost (meaning, cost to buy from a producer, not cost to make it yourself).


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PostPosted: Thu Jul 28, 2011 3:43 am 

Joined: Jul 27, 2011
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User avatarTifanta World
Bellerive Chamber of Commerce
This is really useful information for a new player. It didn't take long for me to work out a guesstimate spreadsheet in Google Docs to help find optimal/near optimal pricing figures.

You have 3 inputs, each with its own column:

Sell Price
Market Price
Minutes

Then there are 5 more columns with various calculations:

Sold Per Day: simply the # of minutes in a day (1440) divided by the value in the "Minutes" cell.

Item Profit: "Sell Price" - "Market Price" (you are going for a profit, right???)

Profit Per Day: "Sold Per Day" * "Item Profit"

Sold Per Week: "Sold Per Day" * 7 (this is just for my personal convenience, since I like to set up for a week of sales at a time)

Profit Per Week: "Profit Per Day" * 7 (again, just convenient to be able to see this information, given the way I like to set up)


EDIT: Now that I think about it, it would probably be easier to have a "Seconds" column instead of "Minutes" and then just calculate "Sold Per Day" as 86400 (seconds in a day) divided by "Seconds."


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PostPosted: Sat Nov 19, 2011 7:31 pm 

Joined: Nov 15, 2011
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Divamics Corp.
I'm new and have a question about this. What about Warehousing costs. Wouldn't this also factor into whether you will make a product? Has anyone done a formula for working that out?

Thanks in advance.


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PostPosted: Sat Nov 19, 2011 10:31 pm 

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User avatarReal Value
 
Warehousing does not have a cost, but there is a "cost" of the capital used to buy inventory. The more inventory you have, the more cash you have used to hold it, which is cash that might have been able to be used to make more money for you otherwise. If you have debt, then this cost is a real interest cost of the debt, which is partly needed to finance inventory.


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PostPosted: Sun Jan 01, 2012 5:51 pm 

Joined: Nov 25, 2011
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User avatarWidget Maker
 
I just use the PHIL. There is a recommended retail price range. I set my price at mid range and let loose the dogs of marketing. I might not be making the optimal profit but time used to figure out the pennies isn't worth the effort.


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PostPosted: Tue Jan 03, 2012 10:43 pm 

Joined: Oct 28, 2009
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User avatarAPCE Production
Automotive Genius
whariwharangi wrote:
I just use the PHIL. There is a recommended retail price range. I set my price at mid range and let loose the dogs of marketing. I might not be making the optimal profit but time used to figure out the pennies isn't worth the effort.


If I used middle phil pricing, my profits would be closer to 1.3 billion per day compared to 1.8 billion per day.

Save all of those pennies, then one day you'll be able to get something worthwhile, don't you think? With those pennies, I bought the stores that profit me in the billions on a daily basis.

APCE

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PostPosted: Mon Jan 09, 2012 2:13 pm 

Joined: Nov 6, 2009
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User avatarReal Value
 
APCE Production wrote:
whariwharangi wrote:
I just use the PHIL. There is a recommended retail price range. I set my price at mid range and let loose the dogs of marketing. I might not be making the optimal profit but time used to figure out the pennies isn't worth the effort.


If I used middle phil pricing, my profits would be closer to 1.3 billion per day compared to 1.8 billion per day.

Save all of those pennies, then one day you'll be able to get something worthwhile, don't you think? With those pennies, I bought the stores that profit me in the billions on a daily basis.

APCE


Yes, it is definitely worthwhile looking at product profitability at different pricing levels. Profit maximization for the amount of equity you have invested in your business is very important for success. Pricing to the middle of the PHIL range is not terrible, but it is also rarely close to optimal.


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PostPosted: Sat Mar 03, 2012 8:56 am 

Joined: Nov 6, 2009
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Emerald City
Simunomics Supporter
I'm pricing much higher than PHIL range prices now after the update. Cost to buy products is sometimes even higher than PHIL retail price range, so seems very high, but retail store prices are even more of a disconnect with PHIL suggested ranges for pricing.

I'm wondering if PHIL recommended prices are for products that have a QA0 level only?


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PostPosted: Sat Mar 03, 2012 6:45 pm 

Joined: Oct 29, 2008
Posts: 1317
Location: Romania
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User avatarMetatron
Brainstormer
CynthiaM wrote:
I'm wondering if PHIL recommended prices are for products that have a QA0 level only?

Of course it's for q0
I use the middle of the PHILL recommended on top of which I add the quality bonus.

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