MoldMaking Technology

NOV 2018

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Page 27 of 51

Business Management 26 MoldMaking Technology —— NOVEMBER 2018 By Charles Daniels Steps to Better Mold Prices Improving your mold pricing requires a deeper understanding of your business. customer and allow for a proit. Opportunity cost must also be a part of the equation. If you win the project that you are pricing, evaluate how that affects your shop's capacity and its ability to win other projects or complete other molds. Common Pricing Pitfalls Other errors that companies make when pricing include chas- ing sunk or irrelevant costs, setting prices solely based on experience, setting prices solely based on competition and improperly using discounts. It is important to ensure that the revenue that you generate from building molds is suficient to cover all of the costs associated with running the business. However, rigid pricing models that force the inclusion of fac- tors like unused capacity run the risk of creating proitable job loss. This model could lead to more unused capacity, which forces higher prices and eventually causes a death spiral in the demand for your molds. Pricing based solely on gut feelings, hunches or "because this is the way we have always done it" is another recipe for P ricing is a critical step in the mold- building process that does not get the attention that it deserves. Shops use several methods, and some are more effective than others. A solid understand- ing of the proper way to price molds can increase revenue and proits and improve customer relations and forecasting. While no magical solution its all companies in every market, you need to be aware of the following key considerations: Pricing Plan The irst step in establishing the proper price for a mold is understanding your busi- ness by identifying all of the costs associated with operating the business. This includes costs associated with making the mold or molds that you are pricing and any addi- tional costs associated with the project, such as shipping or sampling. A thorough com- prehension of internal processes, capacity and the value state- ment that you offer also is essential. Once you establish an accurate picture of the costs incurred and the value that you offer, it is then necessary to look out- ward. You should use benchmarking and competitive analysis to establish the value that other companies offer and the price that they are charging for that value. Awareness of the needs of your customers, the abilities of your vendors and the overall econom- ic climate are important elements of which to be aware as well. The most signiicant point to remember is that all of these things can change. If your current pricing model is from the …†‡ˆs, there is a good chance that it is irrelevant and potential- ly causing harm to your operation. Constant monitoring and re-evaluation are the only ways to ensure that the data that you are using to arrive at the price is accurate. There are several ways to use this information to price a mold project. Regardless of which pricing approach you use, the proper price should cover the costs necessary to complete the project, reflect the value that you are offering to your

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