Production Costs Influence Intelligent Pricing Strategy

Last time, Marka and the FEI tribe discussed how understanding price inelasticity can help businesses arrive at an effective pricing strategy. This week, Marka discusses the role costs should play in determining product pricing. Remember, fire = print.

“If demand sets a ceiling on the price FEI can charge for matches and other products, costs set the floor,” Marka explained to the tribe. “If we don’t charge a price that at least covers the costs we incur by producing, packaging, distributing and selling the product, we will simply be unprofitable.”