Calculate prices, calculate profit margins, calculate profit margin, calculate costs

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Who hasn't experienced this? A bill flutters into the house, but the amount differs from that of the previous year. Why? Energy, raw materials and personnel costs are adjusted to market conditions, and inflation, rising rents and ancillary costs must also be taken into account in pricing. In this respect, it is not unusual for prices to be adjusted upwards on a regular basis - sometimes even annually.

How are sales prices calculated?

The determination of sales prices is quite individual and is adapted to the product and your company. First of all, the purchase prices of the basic materials or raw materials are calculated down to the final product. The costs that you incur are added to this.

These include

  • Personnel costs: In addition to wages and salaries, there are also non-wage costs (social security contributions) such as health insurance, pension insurance, long-term care insurance and unemployment insurance and, if applicable, employer contributions to direct insurance or capital-forming benefits.
  • Building costs such as rent or interest for real estate loans, or depreciation for buildings and/or land, ancillary costs such as electricity, water, gas or heating costs, property taxes, waste disposal, as well as cleaning and maintenance of the buildings
  • Costs for depreciation of machines and equipment as well as their maintenance, cleaning and repair
  • Vehicle costs, if company vehicles are available
  • Contributions to the Employer's Liability Insurance Association, professional associations
  • Costs for marketing and PR (trade fair appearances, advertising in newspapers and (trade) magazines, on the Internet, radio or television, flyers, leaflets, brochures, Internet presence) etc.

Many companies include these costs with a flat percentage in their margin. This should also include a certain profit margin. The profit margin should primarily be used to make investments and thus increase the growth of the company.

The pricing of a company is a complex and individual subject area and should be well thought out and planned, because it is not only important to find a price basis that enables cost-covering and profit-generating activities and leaves room for profits, but at the same time guarantees long-term competitiveness.

Topics: economy, business, enterprise, self-employed, price calculator

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