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Need Pricing Help

  • 16-05-2011 6:06pm
    #1
    Grue
    Closed Accounts Posts: 8 ✭


    I am part of a team working on a creative project. This is all of our first business venture, and most of us are still in college. We are producing an educational DVD to be sold online and in stores, in a specific niche market/demographic.

    We are currently debating the pricing issue. 19.99 was the initial consensus position, but there are arguments being put forward to go both higher and lower.

    The average RRP of similar products would be something like 30, within a range of about 15 up to 50 euro.

    We believe that our product is of a good standard, and so want to charge the average, but as it's our first venture we want to be sure of reaching our projections, so the argument is that we should come in lower.

    We are all creative/science students and so would appreciate any guidance from business heads.

    What guidelines/formula/principles should we apply to come up with a suitable recommended retail price?

    I am going to check out some marketing books in the library too, and will hopefully find something there.

    Thanks


Comments

  • #2
    switcher
    Registered Users, Registered Users 2 Posts: 19 ✭switcher


    Good work on getting this far! i'm not an expert but would your rrp not depend on
    1) The cost of production per unit
    2) Profit you want to make from it?
    3) Selling at a price where consumers feel they are getting a good deal so you can sell quantity?


  • #3
    ssbob
    Registered Users, Registered Users 2 Posts: 2,736 ✭✭✭ssbob


    switcher wrote: »
    Good work on getting this far! i'm not an expert but would your rrp not depend on
    1) The cost of production per unit
    2) Profit you want to make from it?
    3) Selling at a price where consumers feel they are getting a good deal so you can sell quantity?


    Don't forget VAT, and will you be selling direct to the consumer or to shops?


  • #4
    Grue
    Closed Accounts Posts: 8 ✭Grue


    Initially we are going sell the first run of the product ourselves online, whilst at the same time looking for distributors, or selling directly to stores ourselves in Ireland.


  • #5
    ssbob
    Registered Users, Registered Users 2 Posts: 2,736 ✭✭✭ssbob


    Grue wrote: »
    Initially we are going sell the first run of the product ourselves online, whilst at the same time looking for distributors, or selling directly to stores ourselves in Ireland.


    If you sell directly then you will make all of the profit however you will need to spend alot on advertising to achieve the same sales as a distributor or chain of stores will give you however if you sell to them then you will have to give them a decent margin so as they can also make money off the item.

    Therefore if the RRP is €30(say) then the net sales price will be €24.79(after deducting the 21% VAT), you will need to give them a decent margin otherwise they won't stock the item so I would suggest they would want at least 20% so your sales price to them would be €20.66+VAT, is it feasible to make this for less than 20.66 including all shipping and handling related charges?


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