Step 1: Identify Pricing Risk Factors.
Determine risks associated with your pricing objectives. Look at how the price is affected by:
1. supply and demand.
2. the competition.
2. economic conditions.
3. government regulations.
How does the target market itself affect your pricing?
Open a document and title it Pricing.
Create a heading on the document and label it Risk Factors.
Write four to five sentences that describe your product in relation to each of the specific risk factors.
Step 2: Determine Your Pricing Objective(s)
Determine your pricing objective. Note that you can choose to maximize sales, profits, market share, or simply to cover your costs and earn a modest profit.
Create a second heading on the document and label it Pricing Objectives.
Write your pricing objective in one or two sentences. Note that you may decide to optimize on more than one objective at the same time.
Step 3: List the Pricing Factors and Calculate.
Open a spreadsheet and title it Pricing Worksheet.
Create five columns with the following headings:
4. Product/Service.
5. Cost of Goods.
6. Cost of Sales.
7. Markup.
8. Product Price.
9. Discount.
For owning a doggy daycare and 5 sentences to explain all the things.
Risk Factors:
- Supply and demand: The demand for doggy daycare services may fluctuate based on factors such as people's work schedules, vacations, and disposable income.
- Competition: There may be other doggy daycares in the area offering similar services, leading to potential price wars or the need to differentiate our services to justify higher prices.
- Economic conditions: During economic downturns, pet owners may prioritize spending on essentials over luxury services like doggy daycare.
- Government regulations: Regulations related to animal care, safety, and zoning can impact the cost of running a doggy daycare business.
Pricing Objective:
- To maximize profits while remaining competitive in the market and offering high-quality services to attract and retain customers in the long term.
Pricing Factors Worksheet:
1. Product/Service
- Doggy daycare services
2. Cost of Goods
- Daily expenses such as food, toys, bedding, cleaning supplies, and staff wages
3. Cost of Sales
- Costs associated with marketing, utilities, rent, insurance, and licensing fees
4. Markup
- A standard markup percentage to cover overhead costs and generate profit
5. Product Price
- The final price charged to customers for a day of doggy daycare
6. Discount
- Any promotions or discounts offered to attract new customers or retain existing ones
TABLE 1 Sample Pricing Worksheet
1. Product or Service. 2. Cost of Goods. 3. Cost of Sales. 4. Markup. 5. Product Price. 6. Discount.
Select one of your products or services and add it to the worksheet under Product or Service.
Continue across the row to fill in the cost of goods, cost of sales, markup, product price, and discount for each product or service listed. Add at least two products or services.
Cost of Goods: This is the amount of money you’ll spend to get your product ready for sale, including the cost of materials, labor, and even the cost to dispose of waste from the manufacturing process.
Cost of Sales: This is the amount of money you’ll spend to market and sell your product or service.
Markup: This is the fixed amount or percentage you plan to add for profit, in addition to the costs.
Product Price: Based on the pricing factors you identified in the previous step, either add or multiply the markup to the total costs to calculate your product price. Note whether this is the wholesale or final retail price and list both if appropriate.
Discount: Consider the fact that you will likely want to offer a discount at some point, whether your product is priced for the wholesale or retail market. In the final column apply a percent or fixed dollar discount to your product price.
Step 4: Reflect
Add a final heading to your Pricing document and Label it Pricing Reflection
Review the Pricing Worksheet and, in two to three sentences, reflect on how your pricing strategies worked when applied to your product or service. What worked well, or what will you need to change? And all of this for a doggy daycare.
TABLE 1 Sample Pricing Worksheet
| Product or Service | Cost of Goods | Cost of Sales | Markup | Product Price | Discount |
|--------------------|---------------|--------------|--------|--------------|----------|
| Doggy Daycare A | $2000 | $500 | 20% | $3000 | 10% |
| Doggy Daycare B | $1800 | $450 | 25% | $2700 | 15% |
Pricing Reflection:
After analyzing the pricing worksheet for our doggy daycare services, it seems that our pricing strategy is effective. By factoring in the cost of goods, cost of sales, appropriate markup, and discounts when necessary, we have been able to set competitive prices for both Doggy Daycare A and Doggy Daycare B. Moving forward, we may need to consider adjusting the discount rates or exploring bundling options to further attract and retain customers.