The buyers After setting the goals, it's time to move on to demand

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This variable is not only related to the characteristics and desires of your Buyer persona , but also to their willingness to pay.

As we know (according to the law of supply and demand) the demand for a product while, in perfect competition, the price decreases.

Following this law, it is expected that if the price decreases, sales will increase. However, if the price is too low, the entrepreneur may lose money.

Another important factor is that certain products are purchased not for their functionality, but as a status symbol and reducing prices could have the opposite effect.

Certain products are more sensitive in terms of demand as prices change.

For example, if the product is a commodity like salt, demand is unlikely to change with a price reduction, unlike luxury products like salmon.

Moving on to another scenario, if your product is difficult to be replaced by a similar product, a price increase will have little effect on consumption, as is the case with the increase in bus fares.

However, in the long run, the trend is for people to become more price-sensitive, creating new habits (such as ride-sharing apps).

Furthermore, it is important not to limit ourselves to just the quantity sold. To calculate profits, we must also consider costs.

Costs
In general, prices should not only be calculated on costs, as people also evaluate perceived benefits.

Still, it is important to define a break-even point in order to establish pricing strategies and understand what conditions, at different prices, make a product profitable.

To calculate the minimum number of units needed to break even, we use the following logic:

Break-even point = fixed costs / contribution margin

Fixed expenses are those that do not depend on sales (rent, salaries, electricity, among others).

The contribution margin is the profit of each unit sold, that is, the difference between the price and the variable costs (production, inputs, commissions, rates).

Let's see an example of applying the formula:

Suppose a hotel has a fixed cost of $100,000 to panama mobile database maintain its operations annually and for each daily room occupancy it has a variable cost of $40. If the daily rate is $200, how many daily occupancies does this hotel need to sell to break even?

In this case, the contribution margin = $200 - $40 = $160. Therefore, the break-even point is = $100,000 / $160 = 625 daily occupancies .

The hotel will need 625 occupancies per day to reach the point where it starts to generate profits. If you manage to sell 1000 per day (375 more than the break-even point), the profit will be $60,000 (375 X 160 per unit).

We can also calculate the break-even point to find out how many units we need to produce and sell to achieve a given profit, at a given price.

In this case, the break-even point = (fixed costs + target profit) / contribution margin. In the hotel example, if the desired profit is $200,000, the account is: ($100,000 + $200,000) / 160 = 1,875 daily occupancies .

While this method is useful for initial analysis, it does not address other influencing factors such as personal preferences, demand, branding and competition.