Pricing

Once you know the costs associated with producing your goods or service you can work out a price. You need to include the direct costs of materials and labour and a portion of the overheads per item produced. Working out materials costs is fairly straightforward but it can be quite difficult to work out how to spread overheads and how to include the right labour costs taking into account holiday pay etc. You also need to take into account what price the market will bear. If you find that your prices are working out high in relation to what you know people will pay you need to look again at all input costs and your productivity rates.

To work out your income you multiply the price of your goods or services by the estimated number of sales. You should do this for 12 months in advance. Be realistic about your sales, they will probably start slowly. If your income will come in through invoicing rather than cash sales the business will probably need a longer time to be self-financing.