

                         Pricing and Profitability

     [] How do we set prices? Is there a policy?

     [] Is the pricing competitive?

     [] Is there perceived value (it costs more therefore it must be better)
     inherent in higher prices?

     [] Are prices based on costs -- standard markup?

     [] Why are they higher or lower than competitors?

     [] How elastic (the effect of pricing on demand for product) is the
     market for these products?  How does consumer positioning affect
     elasticity?

     [] See also Break Even Analysis in the Financial Projections section.

The prices for our products /services are determined first and foremost by
XXX (competition, costs, suppliers, manufacturers, package deals).

It is important to know that XXX (sliding scales, volume, regulated,
competitive, perceived value ), pricing is inherent to our market profile.

Compared to the competition, our prices are XXX.

     [] List examples of competitive pricing.

     [] Put copies of price comparisons and reports in the Appendix.

Different seasonal aspects of our market affect our pricing because XXX
(what happens as your selling seasons change).

We feel that our customers will pay $XXX because XXX (purchasing rationale,
see also "Pay Back" in Product/Service Description section.)

Margin Structure

Retail
     [] Ask friends/customers in retail management regarding quantities they
     are likely to buy and discounts that would entice them to order more.

Distributor
     [] Ask regarding quantities their customers are likely to order, Gross
     Profit Margins/percentages they work with.

Manufacturer's Representative
     [] What percentage commissions to they make?  Usually between 5 and 20%.

Direct Sales
     [] Determine cost of each sale -- time and expense involved, package
     deals.

Discounts

We can take advantage of volume purchases by XXX.

     [] Place scheduled orders (100 units per month = 1,200 units ordered
     over a year -- just place the order up front).

     [] Are there discounts for paying cash or within XXX days?

Cooperative advertising -- manufacturer pays 2-10% of purchases toward your
advertising of their product.

We plan to review our pricing and product/service margin every XXX
(months).

     [] Should a new pricing policy be investigated?  Are potential
     profits being left on the table?

Costs

Estimated cost of manufacturing product XXX.

     [] Rationale/explanation.

     [] See Financial Projections section for details -- work with the
     Break-Even Analysis worksheet to evaluate the effects of variable
     costs, sales volumes and pricing levels.
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