Prepare a matrix with all your costs, as also the mark up you expect to make for the product. Estimate the expected income and assess profitability and also the yield
To calculate the necessary retail price for your merchandise or services, you must consider the amount of profit you wish to earn and compare it to the highest price the market will tolerate. For example, to earn a 30 percent profit on each item you sell, the retail price of each item must equal the wholesale price plus a 30 percent markup of the wholesale cost. However, if the current market price of the item is significantly lower than the price you calculate, you must typically decrease your markup and settle for a lower percentage of profit.
Markup of Cost vs. Profit Margin
Some business owners may confuse markup of cost with profit margin. Though markup of cost and profit margin both measure the amount of profit your business earns on a sale, they aren't the same. Markup of cost is a percentage of the wholesale cost of the item, while profit margin is the dollar amount by which the item's retail price exceeds its wholesale price. For example, an item with a wholesale price of $50 and a retail price of $75 has a profit margin of $25 ($75 - $50 = $25) and a markup of 50 percent ($25/$50 = .50 x 100 = 50 percent).