I have the incredible opportunity to manage a technical product line for my company. From a sales perspective, technical products are kind of cheating. They make it very easy to sell based on value. That’s because the technicality of the product can become the value proposition. Which is great for me, because I love to educate my customers on why my product will be so valuable to them.
Below are ten reasons why I love selling products based on value: Continue reading
How much does a premium latte actually costs the neighborhood shop down the street to make? What about that national chain of coffee shops we all know and love? Most of us probably don’t want to know the answer to that question. We might find out just how much money we are giving away each year.
As we have seen, there are a lot of different costs we might be talking about. These include fixed costs and variable costs. Buried in those are even more costs that our accountant friends love to talk about. A person can get rather dizzy trying to sift through all the different ways a company can look at its costs. Continue reading
Pricing related to supply & demand
The graph to the right is the standard relationship between supply and demand. What I hope you will notice is that as price increases, the quantity of units sold decreases. The opposite is true as well.
So, if you are BMW, you can’t expect to sell as many vehicles as Ford while maintaining your high price. And if you are Walmart, you can’t expect to sell at the high volume you currently do if you raise prices. Continue reading
A friend and I were working together this last week on a business plan he is putting together for the company he works for. He is taking at look at bringing a few new products into the market he currently serves. So we were talking about typical business model topics like his value proposition and mission statement. The issue that really started getting me excited was trying to figure what his potential product quality and price points were going to be. His proposal depends heavily on understanding these two pieces and how they relate to the competitions strategy. So I wanted to use this post to share some of the takeaways from that conversation.
Calculating the break even point is one of the most important concepts that business owners, entrepreneurs, and general managers can understand. This is because the break even point is when you transition from operating at a loss and actually start making a profit, which is the goal of every business.
The very first question to ask is what are we trying to sell? A service, a product, or a mix of products and services? For this example we will be assuming a very simple product offering. We are going to imagine that we are opening up a coffee shop that only sells lattes. You will likely have a mix of products and services that you will want to analyze. If your cost accounting is accurate, then you should be able to determine the break even point for each product and service you offer. Continue reading