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10 Reasons why you need to price your physical product 5x more than the manufacturing costs

To do this, you can either raise your price or lower your costs. It is easier to raise your price. You have to design this into your product plan.

For example, if you have an idea for an excellent pencil but it's going to cost you $10 to make one you need to make sure that you can sell your pencil at a $50 price point. It is certainly possible: Mont Blanc pens and pencils sell for $100s of dollars apiece.

    1. You need money for advertising

    This can be 20% of the retail price or more.

    2. You need money for shipping

    Even if your product does not weigh much by itself shipping 100 or 1000 of them to different locations can add up quickly.

    3. To expand you need to make enough to pay someone to do the work for you

    This is where a lot of products get stuck, mine included. There has to be enough of a buffer so that once you start selling a lot, you can step away from the management of fulfilling orders and have enough margin to pay somebody else to do it.

    4. Retailers typically want 20% for their gross profit

    5. Distributors typically want 20% for their gross profit

    6. You need to be able to afford returns

    7. If your price is too low, it is difficult to raise it.

    8. You can afford to offer discounts, coupons, and sales.

    9. You have a buffer and can cover the costs of returns and other unexpected problems

    10. You need to make money for yourself!

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