Determining the sales costs

The unitary cost is the elaboration expense. It can be calculated in the following way:

Production cost is equal to the unitary cost.

Then calculate the total amount of units you are going to produce.

If the unitary cost is of $0.75 and if the price of your competition is of $1.70, and your product is in demand, the price of your product could be of $1.50.

You will also need to consider the following:

• The unitary price of the product.
• The price of your competition.
• The product demand.
• The purchasing capacity of the market.
• The payment facilities offered.
• The time in which you are hoping to recover investment costs.

All these are equal to the unitary price of the sale.

If your customers can pay the price you offer, you will soon recover your investment.

If your price is good, you will not have a lot of competition, especially if the product has good quality.

Determining the Point of Equilibrium
The equilibrium point determines the minimum amount of units that need to be sold to cover the production costs. Over this level, the company obtains utilities, if it goes under, the company losses.

Knowing the equilibrium point will allow you to know the minimum amount of units that need to be produced, study the varied price probabilities, plan your sales, and calculate how much money is needed.