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Rob Campbell

In order to calculate profit, you first need to be very clear about your costs.

Profit = Revenue - Expenses

Therefore, determining the cost to produce each purse, and any additional expenses you incur in the production of the purses - overhead expenses, loan obligations, etc. - is a necessary first step.

A very important second step is determining what your mark-up is going to be. What will you sell your purses for? In order to settle on a pricing strategy, you need to understand the industry and your competition. If you're targeting boutique shops, find out what their purchase price is for varying types of bags. If you feel that your bags are of high quality and therefore high value compared to other brands of bags, then you can sell them at a higher price. You may, however want to come into the market at a slightly lower price to challenge some of your competitors, boost sales and create a brand for yourself. If you're successful, then your purses will yield higher demands and eventually higher prices!

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