A GENERAL PRINCIPLE IN PRICING THE SALE OF SMALL, MANUFACTURED ITEMS IS THAT THE MANUFACTURING COSTS SHOULD BE 1/10, OR LESS, OF THE SELLING PRICE. FOR EXAMPLE, IF IT COSTS $1 TO MAKE AN ITEM, THEN THE ITEM SHOULD BE PRICED TO SELL FOR AT LEAST $10. IF MANUFACTURING COSTS ARE $10, THEN THE ITEM SHOULD SELL FOR AT LEAST $100.

Manufacturing costs have to be 1/10th, or less, of the selling price because there are additional costs associated with: advertising, marketing, research, development, prototyping, inventory, packaging, transportation, insurance, breakage, returns, etc. Also there has to be a profit margin.

This is one of the driving reasons why manufacturing is offshored, in order to minimize labor and manufacturing costs, so that the final selling price is reasonable and competitive.

Charles Tadros, M.D.

July 24, 2021

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