Four ways to set prices on your goods or services. (Sales and Marketing)

Big or small, all businesses have the same aim: to make a profit. You may also be in business because you want to be your own boss, try out your creative ideas, or some other reason, but no business enterprise will fly long unless it's profitable.

A prime ingredient for profit is the prices you charge. They must be high enough to reflect your true cost of doing business plus an adequate return, yet not discourage customers from buying your goods.

Pricing also has other functions. You can set prices to meet or discourage competition, to interest current nonusers in your type of goods, as a come-on to build store traffic and hike sales of other items. In such cases, the size of the profit on an item temporarily may take a back seat.

Your type of business also has a bearing. A high-volume business like a grocery can thrive with profits counted in nickels; a low-volume business like furs needs a high differential between cost and price. Non-cost factors--location, flair for presentation, name recognition, reputation--also have an effect.

Pricing Parameters …