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HSBC Mubcc

The document outlines a framework for forecasting costs and pricing models for new products. It emphasizes the importance of considering variable costs, profit margins, and fixed costs when determining product pricing. Additionally, it suggests testing and adjusting prices based on customer feedback and market response.

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7 views6 pages

HSBC Mubcc

The document outlines a framework for forecasting costs and pricing models for new products. It emphasizes the importance of considering variable costs, profit margins, and fixed costs when determining product pricing. Additionally, it suggests testing and adjusting prices based on customer feedback and market response.

Uploaded by

isfaaqsheik
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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HSBC MUBCC

How do you forecast the cost?


• Provided little financial data for the new project

• Have prior cost models

• Extract from previous companies(R&D) financial data


PRICING MODEL – in case of
implementing a new product in the
market
• Which pricing model should you use?
• There are a few different factors to consider before you calculate your product
price.

• First, determine the pricing model that will help you find the balance of value
and revenue. [Based on your profit margin] – Penetration Pricing

• From there, you can create a pricing strategy that will help your business
grow. – Flat-rate pricing is the most common model for retailers and other
merchants that sell a discrete product since it requires simply calculating one
price per item.
•
• Likewise, you can experiment with pricing tactics that will help you fine-tune
your price per item.
How do you price your model?
1. Add up variable costs per product.
Variable costs are directly tied to the product. These costs increase or
decrease depending on how many products you make. Raw materials and
shipping supplies are both examples of variable costs.

2. Add in your profit margin.


• A profit margin is the percent of a sale that is profit. For example, if a
product with total variable costs of $10 sells for $12.50, its profit margin
is 20% (the $2.50 profit is 20% of the sale).

3. Factor in fixed costs


• Fixed costs relate to the functioning of your business and include items
like insurance, rent, software licenses and permits, and payroll
expenses.
How do you price your model?
4. Test and adjust accordingly
• You will need to give your product time in the market to
understand how customers respond to its pricing.
Usually, conducting a quarterly review can help you
gauge customer interest and satisfaction.

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