We’ll use our example of $140,000 we arrived at for gross sales in our previous article. There is also net sales which we are not going to get into at this time. We’re just keeping things basic and simple right now in order to get a general overview of how it all works together. Later, we can come back and look at further details.
So we need $140,000. The marketing plan is dependent on what we’re selling. The cost/price formula is worked out when the retail price of the widget is not known — like when we are manufacturing it for example. In the Internet business, if you are going to sell e-books that you will be writing, you need to know how much to sell them for.
Here you would calculate the unit cost of making the product, then you would multiply by 3 or 4 depending on the anticipated distribution plan — if you’ll sell through wholesalers, dealers or end users. continue reading…
