Business Question: How do I know what profit margin I should have with no competitors?

Question

My costs are covered at £500 to make each product and it takes a month to create each one. What would be a fair profit margin to sell at £600 800 1000 1500 per unit??

My costs are covered at £500, and I make them from home.

I have done my market research and it is the only thing of its kind around.

I just don't want to be greedy but have a sensible profit margin to work with, yet get the maximum yield.

As we are a small business I am not selling in bulk but just a small amount every month to a niche market .

Would be very greatful for any useful advice.

Thanks in advance.

Answer 1

You have some great advice just don't forget the cost of advertising your product and what kind of advertising if any that you have to use.

Answer 2

Given that your costs for purchased parts and materials, utilities, supplies, contract labor, etc are covered at £500 and that you can produce one unit per month the selling price should be £500 plus however much you wish to earn per month.

If you feel that the market warrants a £1,500 price that is what you should charge.  It isn't a question of being greedy, but of the value the marketplace puts on your product.

Hope this helps

Jerry-the-bookkeeper

Answer 3

well if you have no competition then you will have all of the market share (for now - i hope you've protected your idea/product [see below])

however, if there's no competition it's probably because you're first to the market so how big the share is depends on how well you market your business/product and how much the public need/want it!

your profit margin is what is left from sales income minus your expenses - and as this thing is new to the market it will be very difficult to predict sales levels!!

here are some links which you may find useful whilst you get this thing off the ground:

to protect your ideas - http://www.ipo.gov.uk/whatis.htm

for all round business advice - http://www.businesslink.gov.uk/

for inspirational marketing tips - http://www.cardellmedia.com/smallbusines...

small business advice - http://www.newbiztips.net/

fab business guides - http://www.scavenger.net/home.php

you have some really good answers so far, so i do hope that you listen to comments people give in trying to help you.

good luck with all your business ideas! Rebecca x

Answer 4

You need to provide for administrative expenses, light and electricity expenses,transportations,tax expenses, and other related expenses. As cost of production.Than your expected profit margin. All these should be included to determine the sale price per product.

Answer 5

I'd tend to agree with Jerry-the-bookkeeper's answer.  From what you say, you're producing something quite special.  Your customers need to appreciate how special and pay the price.

For example, bespoke cabinet makers and artists can take a month to produce one of their items, sometimes longer.  Their price tags reflect this.  An artist we know, who takes longer on some commissions may charge up to £100,000 for his works.  Similarly, a cabinet maker that we've worked with charges £2000 and upwards for his pieces.  And, importantly, their clients pay those prices.

It's not a case of being greedy.  You have to live and what you're doing has to be valued.

Good luck!