Today, I gonna talk about this “tc plus cost” thing. I was trying to figure out how to price some stuff I wanted to sell online, and I found this method called “cost-plus pricing”.
So, I did some digging around. I went through a bunch of websites and stuff. Turns out, it’s a pretty common way to set prices. Basically, you figure out how much it costs to make something, then you add some extra on top, and that’s your price. Sounds easy enough, right? That extra bit is called the “markup.”
My experiment
I decided to give it a try with these handmade picture frames I make. First, I needed to figure out the cost of each frame. I added up the cost of the wood, the glass, the paint, all that stuff. And also tried to count how long it takes me to make one, and figured out a number for my time. Then added these two numbers together, that gave me the total cost for one frame.
Markup time
Now for the fun part – deciding how much extra to add. I wanted to make sure I made a profit, but I didn’t want to make the frames too expensive either. So, I started with a 30% markup. I did the math, adding 30% of the total cost to the total cost itself. That was my selling price.
- Wood cost: 5 bucks
- Glass cost: 3 bucks
- Paint and other stuff: 2 bucks
- My time: 10 bucks per hour, and it takes about half an hour to make one frame, so that’s another 5 bucks
- Total cost: 5 + 3 + 2 + 5 = 15 bucks
- Markup: 30% of 15 is 4.5 bucks
- Selling price: 15 + 4.5 = 19.5 bucks
Result
I tried selling a few frames at that price. Some sold, some didn’t. So, I played around with the markup a bit. I tried 25%, then 35%. It was a bit of trial and error. I found that with a 25% markup, I sold more frames, but made less money on each one. With a 35% markup, I sold fewer frames, but made more money on each one.
At the end of the day, I figured out the best markup to make a profit I feel good, and not scaring away customers. I used cost-plus pricing, did some math, played with the numbers a bit, and that’s it. It is a good start for me.
