This was posted as a question in the commercial section, so I'll give my 2 cents from that perspective, as this may be overkill for the little guy making a bit of sausage out of his home kitchen, in which case its really an emotional call on pricing where you are happy making a bit of sausage on the side and getting some pocket money from it and what you charge it not related to what you should be calculating costs from.
In the above posts all I see being used is the direct material cost for the product, there are other costs that should be taken into account. These costs are usually calculated based on hourly rates for processes or other factors. If you take the process of grinding meat and break it down, you would get a per hour rate. You then plug this rate and the hours it takes to do that process in your BOM, and it is calculated on a per piece or weight of product. Here are some cost account categories as an example only.
direct material cost
Indirect material cost
Variable manufacturing costs
fixed manufacturing costs
Fixed overhead costs
variable overhead costs
General and Administrative costs
Product costing is based on these costs as related to the product (a very oversimplified answer, there are many factors in this calculation)
Product Pricing should split out as to types, retail, wholesale, transfer, and others.
A suggested retail price should be based on market information about the product, and its competitive products and set from market information. The SRP is what may be publicly displayed in advertising or on the product itself. Some retailers will then tell you what your wholesale price needs to be to them based on this SRP. That may included what category the product fits in, for instance if your selling fresh sausage into a deli retailer he may calculate his markup at 75%, and say based on your SRP you need to sell to me at that wholesale price. If your selling fresh and are responsible for floor stock and replacing out of date yourself, then the retail M/U is much less, or should be.
IMHO not based on a simple percentage of the direct material costs as suggested above.
Wholesale price should be quoted to a qualified customer based on volumes, their purchase history and or credit rating and other factors. This is very much a case by case calculation that takes into account a lot of factors that will make it hard to simply pull a number from a table, that is if you want your pricing to be competitive and yet profitable. Again definitely not just a percentage of the direct material costs. Case by case is how we calculate this and only to qualified customers, meaning you can't just call up and have someone tell you the price without going thru a quote process.
There's a lot of factors in pricing product, but what the market will bear is a major one. I'd be leaving a ton of money on the table if I were to price our product solely on direct material cost at a fixed percentage.
Cost accounting is not difficult to understand if you take the time to study the basics, but like anything it can get complicated, but does not need to be. If your going into commercial business I'd suggest you take the time to study about cost accounting, a lot of info on the web and its the best way to have a solid handle on your product costs, and also allows you to setup budgets and variance reports from that info.
Perhaps a lot more than you want to take on but I hope may be useful.
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