When you want sell a product or offer any kind of service to the public, it is very important to be able to really know what is the value of the good. Well this is something you should be aware of all companies and people who want to put an item on the market, because depending on it they will be the profits you can get from said sale.
Therefore, it is more than necessary to remove which is the viability of the product or service to offer, what you can also 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 for the article?
Every business is about this, about knowing how much was invested and know how much can be gained from the good to be sold. Fortunately, Excel has the necessary tools to help you calculate this value, in this way you will know with exactly how much you have invested and when you can ask. For this you must follow in detail everything that will be taught to you next.
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 has several aspects, among the most important the time you spent creating it and how much money it cost you to do it. Starting with these two variables can you get to calculate the actual 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 the fixed and variable costs / their estimated total production = cost per unit of production.
Bearing in mind the result of these formulascan be determined what is the profit percentage. This percentage usually has the 30% but he can vary from 30% to 100% this will depend on each seller. This way you can get to obtain the value in which you must sell your product in the market.
However, in order to determine all this, you must bear 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 public, the same must fulfill a mission whether it be satisfying a need or solving a problem. It is also important that you know if it is intended for a older, younger audience, for women or men, among others.
- Study the offer of your competitors: All and absolutely all items sold in the market they have competition, making it a very good alternative know what the price is currently your competitors. This will let you know if it is a high, reasonable price or very low. In addition, you can place a much more attractive price.
- Your product is simple or complex: You must bear in mind if your article in sale is durable or not, if it is not durable you must keep in mind that the same must be consumed quickly, indicating that you must have a relatively low price in the market.
- Establish what your fixed and variable costs are: Here you need to calculate what they are your monthly fixed costs you need for your products to reach the market. In this case you should consider the expenses of electric power, water, telephone, rent, among others. While variable costs refers to the raw material with which you are manufacturing your merchandise.
- Define the profit percentage: When you know all production costs, the next thing is to ask yourself how much you want to earn or when you think it is the real value of your merchandise. It is recommended that you assign a profit margin in percentage, either 30%, 40% 15%, among many other values.
Steps to calculate the cost of production of a product in Microsoft Excel
The best way to calculate the cost of producing a product in Excel is using one of your templates for it, since they have all the necessary options to carry out this procedure successfully. 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 columns, they must include materials, quantity used, cost of use, total cost, Keep in mind that many other columns may also 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 the cost of the product correctly it will be more than necessary to include each of the materials that have been used to manufacture it.
To achieve the total cost it will be necessary to use the SUM function, it will apply to the usage cost columnonce have the price of all the materials used.
To calculate labor, you 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 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 known, the cost of labor and all expensesof must apply the formula to calculate the cost of sale in Excel. To do this you must place each of these data in a cell.
To calculate the cost of selling 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 nueva table where each of the columns has these fields, this will allow you to easily add 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 percentage of the profit margin you want to earn.
It is important that in this point you get a wholesale price and a retail one. Note that the same value should give you reasonable benefits so that your business can be profitable and continue to grow. Please note when placing a fair and consistent percentage so that you do not have an excessively high or very low price. If the number is very high, you may not have so much liquidity.