We are a group of student doing a business plan about a software company. However we are not sure how to determine the price for our product. Here is the basic calculation about the fixed cost and variable cost of our company
Fixed Costs
Salaries (directors’ remuneration) $8,000
Supplies (printing &stationery) $1,200
Repairs & maintenance(upkeep of office) $-
Advertising $20,000
Car, delivery and travel $2,400
Accounting and legal& financial charges $3,800
Rent $12,000
R&D Developments $5,000
Utilities $1,000
Insurance $1,440
Taxes (Real estate, etc.) $-
Interest $-
Depreciation $3,900
Medical Fee $-
Miscellaneous expenses $-
Principal portion of debt payment $17,645
Owner’s draw $-
Total Fixed Costs $78,385
Variable Costs
Cost of Goods Sold $45,150
Inventory
Raw Materials
Direct Labor (Includes Payroll Taxes) $24,000
Total Variable Cost : $69,150
Break event Sales level =76749
We plan to sell the product for $5000/unit. But our teacher query why and how we determine the price. Anybody please answer me how to determine the selling price please. Thank you.