Gee RanasinhaKEXINO · Better marketing for B2B businesses | Fellow of the Chartered Institute of Marketing | Adjunct marketing professor | Speaker | Recovering perfectionist

MOST BUSINESSES FAIL BECAUSE THEY DON'T UNDERSTAND PRICING | MARKETING MYTHBUSTERS

Name: MOST BUSINESSES FAIL BECAUSE THEY DON'T UNDERSTAND PRICING | MARKETING MYTHBUSTERS
Uploaded: 2022-10-18T12:00:14+00:00
Duration: 54 s
Channel: Gee Ranasinha
Description: A product costs $5 to make. Charge $7, you make $2 per unit. Charge $9, you make $4. At $9, you need to sell only 100 units to match the profit from…

18 Oct 2022 · 1 min

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0:54

A product costs $5 to make. Charge $7, you make $2 per unit. Charge $9, you make $4. At $9, you need to sell only 100 units to match the profit from selling 180 at $7. Most businesses fail because they don't understand this math.

Chapters

If you make a product that costs $5 to produce, how much should you charge for it? I don't know, but there's a simple bit of arithmetic that you can do to understand the sensitivity in pricing. Supposing your product costs $5 to make and you're wondering whether you want to charge either $7 for it or $9 for it. Well, if you charge $7 for it, you're making $2 a unit. Duh! If you charge $9 a unit, you're making $4 per piece, or twice as much. Double duh. That means, assuming all other things are equal, you need to sell twice as many products at $7 compared to $9 to make the same amount of profit. May not feel like that, but the math doesn't lie. 100 products sold at $9 makes you more money than 180 sold at $7. Most businesses don't fail because of a lack of customers. They fail because they don't understand pricing.

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