Businesses usually determine product and service pricing by looking at the costs of employees, overhead and wholesale prices plus a little extra added to the price to ensure a decent profit. However most companies don’t consider how much the actual selling of their products adds into their costs. For example car sales people spend most of their time on selling the product, often without success. Needless to say this adds a great deal to the overhead costs for the car dealership. Companies should consider these costs and factor them into their pricing. If they did they might well understand their true overhead costs which would certainly encourage them to look at their entire sales pipeline, and perhaps even spend more wisely on marketing.
- While sales garner a business money, the amount of time it takes to create that sale can vary dramatically.
- For example, a barista never has to convince a coffee shop customer to buy java, but a car salesman can spend significant time attempting to sell a car.
- Cost assessing stratagems in business enterprises often neglect to take into account how much time it does, or does not take, to make a sale.
“When businesses look at their different products and services, they usually have pricing strategy. For products they may, for example, double the wholesale price to cover their overheads and deliver some net profit.”