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    Calendar for Product Pricing

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    Staff members and the board of the Knotfer Prophet Agency have decided to express the dramatic side of well-known and respected community and agency supporters with a calendar that each month displays one of them in a costume that reflects the happenings of that month. The photographs are funny and tasteful. For instance, the mayor was selected for January wearing a red, white, and blue top hat and several strands of red tape that had the words Happy Fiscal New Year emblazoned on them in gold glitter. Everyone involved is thrilled with the galley proofs of the calendar. The painful process of setting a price for this fundraiser is underway. Printing, material costs, and labor costs have been determined. The size of the market for the calendar is questionable. Concerns have been raised about overpricing the calendar, but the agency determines that a 19% margin reasonably reflects demand. The following is known:

    Material costs per calendar = $ 4.95
    Labor costs per calendar = $ 6.47

    My question is what factors should consider first before setting a price.
    What could be some concerns if I set the price to high or too low and how do I figure out what to charge.

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    Solution Preview

    Numerous factors should be considered before setting the price. First of all, the agency needs to have a reasonable idea of the expected sales volume or demand for this product. Based on the expected demand levels, the agency needs to figure out variable costs for the expected demand level. The agency would ...

    Solution Summary

    The solution discusses factors affecting pricing for a calendar, related to the case study in the question.