Defining the selling price is of great importance for those who manage a materials store focused on construction and renovation activities, such as iron and steel stores.
After all, inefficient pricing compromises the financial health of the business, reduces profits, and generates silent losses, such as inventory management errors and unmotivated employees.
In this content, you'll learn how to calculate the ideal value for your products. We've also selected recommendations and sales techniques that benefit your establishment's profitability.
Keep reading to optimize your pricing and strengthen your store's financial management!
Calculating the correct selling price goes beyond simply applying a percentage to the cost of the merchandise; it's essential to understand all the factors that influence its value. This knowledge ensures a fair and attractive profit margin in the market, contributing to customer loyalty.
Below, check out the main points that should be considered when calculating the selling price.
This item represents all costs for a product to be available for sale, considering the amount paid to suppliers to expenses such as logistics, inventory, taxes, electricity, employees, and more. To avoid errors when calculating the final price, it's important to separate costs into two categories.
These are those focused on the product, from its manufacture and purchase for resale to packaging and delivery, including storage.
These are tied to the product but are part of the store's operations, such as administrative expenses, rent, payroll, utility bills, and losses due to damage. Goods with low circulation or that require special packaging conditions should be subject to an equivalent increase.
Not everything that price represents is on paper. The consumer's notion of value is an abstract but crucial aspect. Differentiated service, exclusivity, and convenience add a lot.
Steel sheets and bars can attract attention if they're well-presented, precisely cut, or ready for delivery. This means buyers may be willing to pay more, even if they don't fully appreciate the costs involved in this sales strategy.
Pricing should also consider the business's financial reality. To help with this process, learn three efficient methods for calculating the selling price and avoiding losses.
It is an index applied to the cost of the product to ensure that all charges are covered, in addition to ensuring the desired profit.
Let's assume you purchase a steel plate for R$ 90. Also consider R$ 10 in taxes, R$ 6 in proportional fixed expenses per item, and a desired margin of R$ 30 per unit. The formula would be:
Markup = 100 ÷ [100 – (10 + 6 + 30)] = 100 ÷ 54 = 1,851
By multiplying the unit cost by the markup, we obtain the marketing price to achieve the desired margin and cover all costs:
R$ 90 × 1.851 = R$ 166.59
A second alternative is to integrate the desired value into the total cost. profitImagine your establishment earns R$180,000 per month and has monthly expenses of R$45,000 (rent, electricity, wages, commissions, etc.). Your profit will be:
R$ 180 thousand – R$ 45 thousand = R$ 135 thousand
To set the profit margin:
ML = Profit ÷ Revenue = 135,000 ÷ 180,000 = 0.75 x 100 = 75%
This parameter is useful for readjust prices of each item, according to your demands and working capital.
This mathematical relationship indicates the value of variable and fixed costs per item sold.
If a metal tile is purchased for R$ 150 and the costs add up to R$ 100 (packaging, logistics, taxes, etc.), the calculation will be:
MC = R$ 150 – R$ 100 = R$ 50
The result shows how much you earn per unit. Maintaining a consistent contribution margin promotes financial health and business growth.
For the price to be set strategically, it is necessary to adopt approaches that consider numbers and behaviors (market, customers and suppliers). Below, see actions that help you get pricing right.
Observing the performance of stores that sell the same goods improves understanding of the prices charged. Assess whether the indexes of competition are above or below average and highlight the differences that impact this variation, such as service, region, delivery times and additional services.
The price of products such as sheets, pipes, tiles, rebar and metalons can fluctuate over time, mainly due to factors such as raw material availability and the economic climate. Therefore, consider performing this scan every two months to ensure your company remains aligned with the market.
Control software records costs, monitors margins, applies tax criteria, and tracks sales performance. Furthermore, it performs accurate calculations and produces reports that facilitate business management. Investing in the administrative and financial digitalization of your business is well worth it.
A good business partnership offers competitive pricing, flexible payment options, reliable terms, and expert support. These conditions directly affect your pricing.
Slow-moving products require price changes, while high-turnover items may have more aggressive margins. Review these parameters regularly to determine the best sales strategies for the moment, such as progressive volume discounts or liquidation sales. seasonal periods.
As we've seen, calculating the selling price correctly is the best strategy to avoid losses. Knowing how much profit you can make per item in your catalog is essential to cover costs, ensure profitability, and keep your store running. This scenario favors the natural growth of your business, as well as brand recognition. With efficient pricing, you open up opportunities to innovate, invest, and win new customers.
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