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Kategorie: Allgemein

Missing cost

Fairhaeltnis has been founded to support both companies as well as customers, to be able to find a fair price point for what they sell or buy.

Especially in tough times like the Corona pandemic it is important to make sure that you are priced correct. Businesses offering services have been suffering more during Corona because they were immediately effected. So including the risk as a part of you price calculation could have been an advantage during these days.

In companies there is a phenomena that some costs are overseen in product price calculations. This could be replacement cost, HR costs or cost you have when you work from home to name some examples. Those cost are not part of the production or creativity process. But you have to have the money when your machine break down. You have to spent money finding new employees.

They are part of your fix cost. Good thing about fix cost is that they remain the same and their share will decrease when you have increasing orders. The bad thing about fix cost is that they will remain the same and they share will increase when your orders are decreasing.

So every business has the need to check which part of the sales is needed to cover that risk and finally to define the need as part of your calculation.

Often is happen to forget about the risk adder or to simply assume about it and define it too low. As long as you match your product with your customer needs this price adder as part of the whole price calculation doesn’t make a difference for the purchase process.

Trying to communicate the cost adder towards the customer will hardly work. Customers look what is in for himself.

And here is the potential.

Managing reserves for machines or equipment are a guaranty for your customers that you can supply on time. Including money for Human Resources is a sign that you keep focus on high quality service. Creating a long term relationship between employee and customer proves high services, well known routines and as little changes as possible.

All things which will help you to build ling term customer relationships. Which can the base be to go through tough times and have perfect conditions for a restart.

Added value – or what’s worth it?

Added value at high quality products

Have you ever asked yourself how a price is created for something considered as being expensive? What if I want to offer a high quality product, with added value but it is already available at the market at lower price and lower quality?

Many companies in Germany calculate their prices by summing up their cost and adding a percentage for margin. The so call cost-plus-method.

In higher price segments I have to explain

Weiterlesen

Cost-plus-method

Cost-plus-method

The cost-plus-method is the pricing strategy small and medium sized business as well as large companies use most often. Searching for more information about the strategy in the internet you will find many comments reviling this method.

What is cost-plus about?

Cost-plus is stating that companies sum up their cost for a product or service and add a x% margin for their profit. In reality it is way more complex. Weiterlesen

Price within the 4P

Price strategy and negotiation

Price strategy is often mentioned as negotiation. Companies are guessing the price they think customer is willing to pay and finally add a % to give space for negotiation. This strategy is known as „rule of thumb“. You will not find this as a strategy published in literature but very often used in practices. That’s why we will now take a look at what 4 P is about. Weiterlesen

Hello world!

Welcome at  FAIRhaeltnis

“Fairhaeltnis” is based on the German word “Verhältnis” which stands for balance or relationship. What does price-performance-ration really mean. The intention of this page is to look behind fears and pre-justifications around all sides of pricing topics. Both customers and companies are interested to understand what makes something cheap, expensive or reasonable priced. Example: Why do you find a pair of jeans both at 19,90€ as well as at 199,90€? Weiterlesen

about me

AHA-Moment

My personal Aha-moment was a conversation about a customer order received without any discussion after the supplier gave him his highest uplift when quoting. The company owner was surprised because he didn’t understood why the customer is buying at that high price. Obviously he didn’t understand that the customer isn’t simply buying Weiterlesen

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