Pricing Considerations

Cost of goods sold (COGS) is the cost of the products and/or services
sold to customers. In general, a retailer’s cost of goods sold includes
the cost from its supplier plus any additional costs necessary to get
the merchandise into inventory and ready for sale. For example, assume
that a bookstore purchases college textbooks from a publisher. If the
bookstore’s cost from the publisher is $80 for a textbook plus $5 in
shipping costs, the bookstore reports $85 as a portion of the cost of
goods sold.

For this Assignment, you calculate the cost of goods
sold for a product. Using these calculations, you then develop a pricing
strategy for the product.

To prepare:

  • Review the online calculator tools provided here….
  • Select a product on which to focus for this
    Assignment. It may be a product that is sold by a company you work for
    or hope to work for.
  • Using one of the online calculator tools provided in
    this week’s Learning Resources, calculate the COGS for the product you
    selected. Keep in mind that the numbers you use will be hypothetical,
    but be as realistic as possible when producing these estimates. Use the
    following guidelines:

    • Make an educated guess as to what costs would be involved in producing any given number of the product you selected.
    • Take into account as many costs as you can think of (e.g., manufacturing, shipping, packaging).
  • Once you have calculated COGS, decide how much you
    want to mark up the pricing of your product in order to create the best
    gross margin, aligning with the price that fits your brand.
  • Think about the following considerations related to your product pricing:
    • What is the marketing strategy behind the pricing you decided upon?
    • What is the psychology behind the pricing?
    • How do you predict customers might view the pricing?

    By tomorrow

    Submit the completed Week 5 Assignment Template in which you do the following in 250–350 words:

    • Describe the product.
    • Outline the cost of goods sold and pricing.
    • Explain the marketing strategy behind the pricing.
    • Explain the psychology behind the pricing.
    • Predict how customers might view the pricing.
    • Support your work with specific citations from the Learning Resources and any additional sources.

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