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Sagot :
A business will not be successful unless it charges a price for its products that covers its total costs and margin of profit.
Product pricing is an impotant decision a business should make. No matter what type of product a business sell, the price it charged to its customers will directly affect the success of a business and its sustainability.
All prices set for products must cover costs and profits. To lower its price, a business also should lower its costs. Prices should be reviewed frequently to assure the dynamics of cost, market demand, response to the competiton, and profit objectives. Price should be establised to assure sales.
There are some type of costs a business needs to take into consideration when deciding its product prices:
- Direct and indirect costs
- Fixed and variable costs
- Charging VAT
Direct costs is the cost a business spend directly on its production process. Indirect costs is the cost a business spend that are not directly related to the product.
Fixed costs are independent costs of a product that apply to the entire business despite the fluctuation of units produced. The amount of variable costs depends on the amount of unit produced.
VAT should be calculated as a percentage of a business' price. The rate charged by a business will be depend on the type of products.
Learn more about Product Pricing here: https://brainly.com/question/28189715
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