Pricing is a tricky thing. Most businesses add a 10% to 40% markup. We add
the markup to the cost and put the item on the shelf. Markups are easy but
do they make us as much money as they could? Is cost the only thing to think about
in setting price?
A business should think about other things. Limited supply for a product that
lots of customers want means we can sell the product for more money. What is the
competition doing? In a competitive environment a little change in price might
mean we can sell a lot more. How do customers see our product? One way to convince
customers of quality is to have a high price.
Careful testing and watching customers' responses to new prices will show if it
is working. Cost is not the only consideration for setting prices.