Calculating Marketing Costs
Summary
Understanding pricing for your product is important. There are many costs associated with selling your goods
... [Show More] that need to be taken into account when marketing your product.
Preparation and Packaging
You will need to clean and grade your produce, and then put it into packaging for transport or consumer. For other products you add-value, and package those goods into containers and shipping cartons. This involves several costs, including labor costs and the cost of packaging. The packing facilities with associated costs need to be included, too.
Handling
At each stage of the marketing chain, the product is packed and unpacked, loaded and unloaded, and put into store. Each of these individual costs will not amount to much, but the total of all handling costs can be significant.
Transport
Transport costs will vary mainly according to the distance between the farmer or producer and the market. But they will also depend on the roads. A farmer living close to a main highway will probably face much lower transport costs than one living at the end of a rough road which is difficult for trucks to travel. For value added products, finding a place to produce that is convenient for shipping is important for keeping costs down.
Losses
Product losses are common. Things will get damaged in transit. In general, the longer the distance between you and your consumer, the higher the likely loss. There can also be quality losses during the marketing. This is not calculated as a marketing cost because it will be reflected in the price received at the sale. However, you need to take these losses into account. If a retailer is continually lowering the price on your product due to perishability or non-movement, they will be losing money. You may need to do more promotion and advertising, or analyze the customer’s ordering procedure to find inefficiencies.
Storage
This is an important cost for many products. If your product is stored anywhere in the supply chain then you need to put that into your pricing. Distributors and retailers will almost never pay for the cost to warehouse your product [Show Less]