1 Cost analysis: Calculate the production costs associated with manufacturing
your product, including materials, labour, and overhead expenses. Use a table
format to present your answer.
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2.2 Pricing strategy: Choose an appropriate pricing method, define, and justify your
selection.
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2.3 Set the price: Determine the final selling price for your product, considering
factors such as market activities, pricing policy, influence on other parties, and
gain and risk.
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Cost analysis table:
| Cost Component | Cost per unit |
|------------------|---------------|
| Materials | $10 |
| Labor | $5 |
| Overhead expenses| $3 |
| Total Cost | $18 |
Pricing strategy:
I have chosen a cost-plus pricing method for our product. This method involves adding a markup percentage to the cost of production in order to determine the selling price. By using this method, we can ensure that our pricing covers all expenses and allows for a profit margin.
Final selling price:
Considering market activities, pricing policy, and the need to remain competitive, we have decided to set the selling price of our product at $25 per unit. This price takes into account the cost of production, desired profit margin, and market demand for our product. By setting the price at $25, we believe that we can attract customers while still generating a healthy profit.