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Bargain vs. cost estimation

Bargaining for the final cost is not the right approach,

Why? - Because in bargaining `final cost `will be determined by the bargainer, not by the `cost estimation` methodology.


I would say `cost estimation` is common sense with some processes and mathematics.


Always try to find the final cost using the cost estimation methodology. In the Bargaining, a rich person but a good bargainer will get the benefit and a poor person with a simple attitude ends up paying a high cost OR getting less money for his/her product. Bargaining makes you greedy, you need to have numbers to say How you determined the final cost.


Now let's see how to do cost estimation,

[ The below example and explanation are given by friends. ]


For example, I am manufacturing a book.

What is the market price of the book, others are selling? find the average price.

Do I need a machine to cut paper?

Do I need electricity?

I need a machine to bind the book.

Need raw materials like paper.

Need to store them?

packaging, inside boxes?

Insurance of the company?

Taxes

Company debt, interests.

Need logistics (like trucks) to carry books to the stores.

Machine's deprecation value, how many months it will take to recover the machine's price?


Why .. so many pointers written above, because it will help to think better with multiple dimensions.


what is the average price of a book in the market? You need to think about all these aspects.

Initially, it sounds crazy but after some practice, you can determine the rough price and it will help you to think better. Always try to keep the fixed final price so `no need for bargaining`.

If you are thinking about poor people while deciding the cost of your product then better do charity but don't disturb the final price or `pricing model`.


Note - the pricing model is nothing but the process (method) of determining the final price of the product. Always remember the basics - Do the right thing.


Bargaining may make you more greedy because if with bargaining you can earn more money then you may lose acquiring the real skills for making quality products and remember, greed brings negative habits. I would not call, cost estimation a bargaining, having real numbers will help. Now suppose you went to shop and you are bargaining then try to avoid such places, directly go to the place, where you see a fixed price.


Bargaining is required in many places, for example, salary hikes. In this case, also we need data to prove why am i valuable for a salary hike. Keep improving your skills (with the right plan, direction, and the right guidance), you will keep progressing toward your goal and finally, you will reach there.





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