Exercise: standard margin The company receives a request-for-quote from a customer for 3000 Pro-Valve 602s per month. The customers target price is $45 per unit. Your company requires a minimum of 15% margin. Work out the profitability using Standard Costing.
Example: low cost outsourcing The company has found a Far East supplier quoting a landed cost of $33.00 for the XJ2s. The customers target price is $45 per unit. Your company requires a minimum of 15% margin. Work out the profitability from outsourcing this product.
How do I set the price of a product? Pricing is set by the market. The price is determined by the value created for the customer. –Product, services, intangibles Pricing requires close understanding of the market, the customers requirements, and the competitors. –How much value are we creating for the customer?