when you want sell a product or offer any type of service to the public, it is very important to be able to really know what is the value of the property. Well, this is something you should keep in mind. all companies and people who want to put an item on the market, Well, depending on it, they will be the profits you can obtain from said sale.
Therefore, it is more than necessary to take out what is the feasibility of the product or service to be offered, what can also be call production costs. To calculate the price of a product two questions need to be asked How much does it cost me to produce the product? How much do I want to earn from the item?
Every business is about this, about knowing how much was invested and know how much you can earn from the good that is going to be sold. Fortunately, Excel It has the necessary tools that will help you calculate this valuein this way you will know with Exactly how much you have invested and when you can request. To do this, you must follow in detail everything that will be taught below.
What should we consider when calculating the price of a product in Excel?
To calculate the price of a product you have manufactured you need to have in account several aspectsamong the most important the time you spent creating it and how much money it cost you to make it. starting with these two variables can be reached calculate the real value of that item.
However, according to price theory, this can be calculated using the following formula:
- Total fixed costs + calculation of total variable costs = the sum of fixed and variable costs.
- The sum of your fixed and variable costs / your total estimated production = cost per unit of production.
Bearing in mind the result of these it can be determined What is the profit percentage? In general, this percentage usually has the 30% but he himself can vary from 30% to 100% this will depend on each seller. In this way you can get to Obtain the value at which you should sell your product in the market.
However, in order to determine all this, you must keep in mind the following aspects that we will mention below:
- Evaluate the market: If you have manufactured a product, it must be addressed to a general publiche himself must fulfill a mission, whether it is satisfying a need or solving an inconvenience. It is also important that you know if it is directed for a older or younger audience, for women or men, among others.
- Study the offer of your competitors: All and absolutely all the items that are sold in the market have competitionso it is a very good alternative Know what is the price that your competitors currently have. This will let you know if it’s a high, reasonable price or very low. In addition, you can place a much more attractive price.
- Your product is simple or complex: You should keep in mind if your article in sale is lasting or notif it is not durable, you should keep in mind that the same must be consumed quicklywhich indicates that it must have a relatively low price on the market.
- Establish what your fixed and variable costs are: Here it is necessary that you calculate what they are your monthly fixed costs What do you need for your products to reach the market? In this case you must consider the expenses of electricity, water, telephone, rent, among others. While variable costs refer to the raw material with which you are manufacturing your merchandise.
- Define the profit percentage: when you meet everyone production coststhe next thing is to ask yourself How much do you want to earn or when do you think the real value of your merchandise is? It is best to assign a profit margin in percentage, either 30%, 40% 15%, among many other values.
Steps to calculate the production cost of a product in Microsoft Excel
The best way to calculate the cost of producing a product in Excel is using one of its for itsince they have all the necessary options to carry out this procedure satisfactorily. Therefore, when calculating With the Microsoft program it is necessary to carry out several steps:
The first thing you should do is create a table containing multiple they must include materials, quantity used, cost of use, total cost, keep in mind that there can also be many other columns that have to be taken into account in this calculation, this will depend of the product that has been manufactured.
This means that in order to calculate product cost correctly it will be more than necessary to include each of the materials used to make it.
To achieve the total cost it will be necessary to use the the same will apply to the usage cost columnonce have the price of all materials used.
To calculate laboryou must multiply what are the hours invested in the production of a product or a service, as the case may be.for this you must have a hourly rate that will be the reference for the price.
Then another must be done table in excel where they should record all expenses derived from the production of the service or product, and again use will be made of the SUM function so you can know the expenses.
Once the cost to create the item is knownthe cost of labor and all expensesmust apply The formula to calculate the cost of sales in Excel. To do this you must place each of these data in a cell.
To To calculate the cost of sale of a product you must apply the formula where all the values of the cells of the cost of the product are added, labor and total cost. In this way you will know the price of the merchandise.
Another way to do this is to create a neweva table where each of the columns has these fields, this will allow you to add easily without having to resort to Excel formulas to execute the mathematical operation. Once this value has been obtained, the following will be multiply by the profit margin percentage you want to earn.
It is important that in this point you get a wholesale price and a retail price. Note that the same value must give you reasonable benefits so that your business can be profitable and continue to grow. Keep in mind to place a fair and appropriate percentage so that you do not have an excessively high or very low price. If the figure is very high, you may not have so much liquidity.
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