A mistake I see time and time again is people not knowing or understanding why they need to know the costs of their products. I always reflect back on my early days working at a small mom n’ pop coffee shop… The owners should have known the cost of the wholesale products that they were buying but they were working off a wholesale price list that was 3 years old. They were selling a piece of carrot cake for $1.25 and the cost for it had increased throughout the years and they were being charged $1.30 wholesale… I’m sure you can see where I am going with this. It is so important to know the costs of your products and to ensure that you are reviewing them every time there are changes in the market. It is also very important to keep in mind the costs that it requires to run your business, you need to make money from your sales to pay rent, wages, electricity etc.
For the cost of the carrot cake it was wholesale $1.30 but for our markup we make it $2.25 to ensure we have enough margins to pay for our everyday costs as well as cover the cost of the product!
I know it may seem like a basic thing to know about your business but it is important to constantly monitor your costs as one particular item could go up and your prices need to reflect this increase so you are not selling products or services for no return! It’s great to give your customers an amazing deal but bottom line we are all here to have a successful business and make some money ☺