Put yourself in the customer’s place, then fix the price. During periods of
low consumer expenditure it may matter whether your product/service is a
necessity or a luxury item.

Market Structure
Depending on the competitive situation in your market you must at least
investigate the below:

• General price level of the product/service
• Are the competitors campaigning on price?
• Which other competitive parameters apply?

Inter-changeability
If price is the most important parameter you must also consider if other
products/services are inter-changeable with yours. If you sell take away
spring rolls and your neighbour sell hamburgers these products are inter-
changeability. The customers hunger will be satisfied from both products.

The higher inter-changeability the more the customer gains from
purchasing the cheapest product/service.

Supplier
Some businesses have a extensive net of suppliers around the world.
Others have none because they are their own supplier. Do you have a
product that require goods delivered by specific suppliers you should state
this in the business plan.
The supplier could have a big influence on the performance of your
company. What happens if they go bankrupt or their quality goes down?
Can you find other suppliers to fill the gap?

Stock
You have to consider how much stock is needed in your company. The
ideal situation is that you always have the item in stock your customer
wants to buy. On the other hand it is also very expensive to have too much
in stock.
Maybe the fashion changes and customers like the colour red but you only
have green in your stock. That is bad luck and your red items in stock are
worth nothing.

A general rule is that 20 % of a business’s products generate 80 % of it’s
income. Try to locate the 80 % of the products and eliminate them from the
product line. This might minimise the need for a large stock.

Maybe you could make a deal with your supplier that they only deliver
products when you actually have sold them? This is called just-in-time
management.

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