"Todd Fatheree" wrote in message
I never said you shouldn't know your costs. In my first post in this
thread, I said you had to know your costs to be able to calculate profit
to
determine if the product is worthwhile for you financially. Hint: the
market still doesn't care about your cost. It's reacting to a change in
the
competitive landscape.

Just what is the competitive landscape for a single bookcase made by 13 year
olds?

If your material cost went up 10% tomorrow, could
you just tack on 10% to your price? If you gave your employees a 25%
raise
could you increase your product price commensurately? I doubt it.

Right now, are costs are changing rapidly on raw mateial. Yes, we tack it
on, but a 10% raw mateial cost increase does not justify a selling price
increase of 10%. We are passing on actual cost. So far this year material
increase is 50%. It MUST be passed on or we go out of business.

If
someone else came along next week willing to sell the product for the same
price your competitor was selling it at (albeit at a loss), where do you
think the market would set the price? Presto, once again the market
doesn't
care what your costs are. Would the other company be foolish to do so?
Probably, but the market doesn't care.

Correct. I also hope it happens that way as it won't be long before another
compeitor is gone. That will change the marketplace if we are the only
supplier in the region! We lost a large customer to a competitor. They
offered a firm price for a full year that is lower than ours at the time.
Factor in the 50% material increase and we laugh every time we see the lost
customer's truck picking up product.