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The Strategy and Tactics of Pricing: A Guide to Profitable Decision Making
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Pricing and Use of Barcodes

Q. I started my own greeting card company and I am almost ready to present them to a large corp. However, I don't what to go in there stumbling over my words. How do I figure out what to charge the Corp. or my cards? Do I put their barcode on the back of the cards or do I  need to purchase one? Where? Thanks...Laura

Advice by Nach Maravilla
Publisher, PowerHomeBiz.com

 

A. Dear Laura,

Thank you for your questions.

Pricing: The most common way of pricing is by calculating your over-all costs then add your expected percent profit and you come to a price. You may experiment with various profit margins that will give you a good bottom line, but remains competitive in the market. That will be your bottom price. Remember, the goal in setting a business is to earn money, and your pricing must sufficiently cover all the costs that you will incur.

Start by listing down all your expenses. Identify each and every one - your materials (paper, paint, envelopes, etc.); your labor -- the cost of hiring a designer (if any) or the writer doing the card copy (if any), and your time; depreciation, administrative and marketing expenses (cost of advertising, setting up a web site, classified ads), etc, etc. Make sure that you know each of your costs elements.

Then compute your profit margin. It can be as low as 30 percent, or as high as 400 percent. Your mark-up will depend on your industry and the current pricing levels of your competitors. You do not want to price yourself out of the market. Have a benchmark that you will set. This could be your wholesale price.

Then from there you must have a "Suggested Retail Price" that is supposed to be used by everyone including yourself. This is the price that possible dealers, retailers or affiliates will sell your cards to their customers.

Using this approach implies that you make more in profits if a customer buys directly from you.

Now, for the big customer that you are now negotiating, you have to consider the volume of their order. Start from the suggested retail price and show them a sliding down price in relation to the volume they want to buy. It's all up to you how you want to profit from the transaction. You can calculate a volume discount that will ultimately end up as the price the same as a dealer price. If they want a more special price treatment, you can go lower to your bottom price. But make sure that at that price, the volume will be able to give you a comfortable margin. You must also make sure that you can fulfill the order as per your agreed schedules.

Barcode: As I understand, BarCodes are made for Inventory Control purposes and for Identifying the Manufacturer of a product. Since it is your product, I believe you should get your own.

Unless, you will be acting as a sub-contracting printer where the company will have their name as the manufacturer, then you will have to use their bar code as these will become part of their inventory.

In the United States a company can obtain a unique six digit company identification number by becoming a member of the Uniform Code Council (UCC). 

The address and phone is

Uniform Code Council, Inc. http://www.uc-council.org  Princeton Pike Corporate Center 1009 Lenox Dr., Suite 202, Lawrenceville, New Jersey 08648 Telephone: 609-620-0200 Fax: 609.620.1200.

Manufacturers outside the US can contact EAN International http://www.ean.be  (EAN). EAN International maintains an excellent FAQ, standards information and a list of member organizations around the world, many of which have web sites. The EAN site is a must visit if you need to put a bar code on your product.

You must apply for membership and you will be assigned a unique company identification number for use on all your products.

Recommended Books on this subject::

The Bar Code Implementation Guide: Using Bar Codes in Distribution by Stephen Pearce, Richard D. Bushnell

Bar Code Compliance Labeling for the Supply Chain : How to Do It by Rick Bushnell, Jim Dooley

Good Luck !

About the PowerHomeBiz.com Guide: 

Nach Maravilla is the Publisher of Power Homebiz Guides. He has over thirty years experience in sales and marketing of various products, which covered as he jokingly describes, "from toothpicks to airplanes"  He also had extensive experience in International trading and he always excelled in special promotional ideas for  retail outlets. Nach can be contacted at nachm@powerhomebiz.com 

 

The opinions expressed in this column are those of the author, not of PowerHomeBiz.com. Users should not treat the Guide's response as legal, accounting, or professional advice as all answers are intended to be general in nature. Such advice can only be properly given by qualified professionals who are fully aware of a user's specific geographical areas or circumstances, such as an attorney or accountant.

 

 
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