Re: Pricing Honey
Mark, actually just adding your cost does not get it. Certainly not for a small timer. Now if your costs are high enough you can track them individually. but for the small time operation that is usually not economical. It is also whee the small timer looses it.
You say add the bottle cap and label. Did you search up those bottles caps and labels for nothing? did you design the label or just select an off the shelf one for nothing? Did you earn anything for all calculating ordering and receiving of them? What about washing them, extracting the honey, placing that cap on the bottle and applying the label? Did you pay for the computer, the electricity you use, The internet connection and was shipping added to the order? And you are still only at the point you have a bunch of bottles setting around where nobody can buy them. The honey in the bottle is worth what it is worth simply because it is honey. Keep in mind you did some sort of work to earn the money that purchase those bottles,caps and labels as well. Are you just going to settle for getting back money you already had?
A formula for a small timer that helps cover all that additional "Stuff" is this. Anything you pay out for you triple when you price it for resale. A 50 cent jar then ads $1.50 to the cost of the final product. ANd here is why.
1. is simply to get the money you spent back.
2. pays for all those internet connection bills and electricity blah blah blah.
3. is your businesses income. so that next time you can buy another type of jar. maybe a different size. shape do a Christmas gift jar special or whatever. It also covers losses due to broken or damaged containers. Or goes toward the cost of promotions. You want to be very careful to keep that money working. gaining customers or providing perks for your product.
Notice you still have not been paid for your time or effort in any of it. you figure that separately and that also gets added to the price of the final product.
Materials times 3 plus your labor. If you cannot keep you price competitive wit that formula you need to shop harder or smarter. reduce the cost of the materials or work faster.
Here is an example. I have very nice bottle for a Holiday Special I am doing. Total cost of the bottle was $2.51. I Then add a honey dipper for another dollar. The work in making up these bottles is pretty high so I add another 2 dollars for labor. this makes a grand total of $9.50 I charge just for the bottle. My target price was $15.00 each when I add a lb of honey to the bottle at $6.00 a lb it comes out at $15.50 per bottle. I am eating the 50 cents and working to reduce the time it takes to put the bottle together.
Almost half where sold before I even got them ready. But how to do that is another post. I suspect the other half will sell over the next week or so and I hope to turn it around and do it again. My problem is I am running out of honey.
Significant Minority vs Insignificant Majority, 20% of causes produce 80% of the effects.