Thanks for your question fueltech! Net profit (before tax) is the product price minus costs such as wages, rent, fuel, raw materials, interest on loans. So I suggest considering those factors when deciding the price of your products. However, economics also plays an important part in the equation. Sometimes lowering the price will entice customers to buy more.

You should search for averages in your industry. Search for financial ratios from resources like the RMA annual statement studies. And if you have any contacts in the industry- first hand experience and knowledge is always helpful.

It is always a good idea to know what your competition is charging. Janusz worked for the competition for over 25 years designing jewelry and so we knew the incredible mark up charged for high end custom jewelry. We also know what the wholesale mark up to the retailer is in this industry. Some people are skeptical if you charge too little. And some people just 'need' to overpay in order to feel that they have received a quality product. Naturally, we have some costs involved as well as rent, insurance etc. But our niche is that we are direct to the customer without the retail mark-up. One of our customers summed it up nicely for us: You get true value at Jjanusz. Our customers will never be the super rich who like to overspend for what they receive!

Being a patent attorney I can tell you the definition of 'profit' is elusive and quite arbitrary. The term 'profit' can be a contentious term. Let's take the movie business for instance. You will hear that most movies produced by Hollywood do not turn a 'profit'. How can this be? Well, their definition of the word 'profit' is time-sensitive. For instance, it may be true that most Hollywood movies may have not made their money back after their movies are pulled from the cineplexes in the USA. But how about all those international theaters? Is there 'profit'? What about their DVD or Blu Ray release? How about after they've been syndicated on HBO or the MOV on NBC? Likewise, the term 'profit' can mean after you have been paid your salary, your employees, distributors, the advertisers, materials, office space, taxes, and so on so-forth. Or the term 'profit' can strictly mean all the money that's left over after you are done paying the expense of materials. If you're running a restaurant and you sell a salad for $7 and the actual lettuce and vegetables only cost you 20 cents, your 'profit' could be $6.80. However, another definition of 'profit' could be after you, your waitress, the cook, the rent, etc. etc is paid. In which event you may actually be losing $15. To make a long story short the term 'profit' is completely negotiable. If you're selling widgets, you may consider selling or buying 'per unit'. This way you get away from all the legal wrangling and everything gets a lot easier that way.