definition: to establish a selling price for a product. no matter what type of product you sell, the price you charge your customers or clients will have a direct effect on the success of your business. Though pricing strategies can be complex, the basic rules of pricing are straightforward: all prices must cover costs and profits. Review prices frequently to assure that they reflect the dynamics of cost, market demand, response to the competition, and profit objectives. Before setting a price for your product, you have to know the costs of running your business.

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If the price for your product or service doesn't cover costs, your cash flow will be cumulatively negative, you'll exhaust your financial resources, and your business will ultimately fail. To determine how much it costs to run your business, include property and/or equipment leases, loan repayments, inventory, utilities, financing costs, and salaries/wages/commissions. Don't forget to add the costs of markdowns, shortages, damaged merchandise, employee discounts, cost of goods sold, and desired profits to your list of operating expenses. Treat profit as a fixed cost, like a loan payment or payroll, since none of us is in business to break even. Because pricing decisions require time and market research, the strategy of many business owners is to set prices once and hope for the best. However, such a policy risks profits that are elusive or not as high as they could be.

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When is the right time to review your prices? do so if: you introduce a new product or product line your costs change you decide to enter a new market your competitors change their prices the economy experiences either inflation or recession your sales strategy changes or your customers are making more money because of your product or service. Prices are generally established in one of four ways: cost plus pricing many manufacturers use cost plus pricing. The key to being successful with this method is making sure that the plus figure not only covers all overhead but generates the percentage of profit you require as well. In essence a specification is a statement of the attributes of a product, process or service a user wishes to purchase, and consequently, which the supplier is expected to supply. As far as practicable, it is desirable that the requirements be expressed numerically in terms of appropriate units together with their limits. When prepared by the purchaser, specifications inform the supplier what is required. When prepared by the supplier they provide a prospective purchaser with a description of the attributes of a product.

Specifications also provide criteria against which the products and services supplied or available can be compared. types of specifications there are basically 3 types of specifications: 1. A functional specification is a clear indication of the purpose, function, application and performance expected of the supplied material or service, whereby the supplier is allowed or encouraged to provide an appropriate product. These specifications describe the capabilities that the article where applicable, performance specifications are to be selected as they allow wider competition and enable suppliers to suggest new or improved ways of meeting the requirement. Tests or criteria are developed to measure a product's ability to perform and to last, as required. This specification details the characteristics of the product to be purchased, it is so detailed that it describes how the product is to be manufactured, detailing the physical dimensions of the product and materials to be used etc. Characteristics of both are used as prerequisites and as limiting factors in developing the specification.

A specification should be sufficiently detailed so that the product or service will fit the users requirements. It should not be so explicit that it prevents negotiation or discourages buyers or suppliers from using their expertise to propose alternative solutions that may offer better value for money. Preparation of a specification should involve close communication between the user and the procurement and supply chain manager and, if required, assistance from technical experts.

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Involvement of potential suppliers may also be helpful in developing a specification. if supplier input is required it must not result in adoption of a specification that favours one particular supplier. This is a requirement, not only of the national regulations, but also of the eu treaty under article 30.

when preparing a specification the following should be considered: use functional and performance criteria where possible.

any technical specifications should be defined by reference to any european, international, national and quality assurance requirements, which are relevant. References, which have the effect of favouring or eliminating particular suppliers, contractors, products or services, should be avoided. It is not normally permitted to use brand names, sources of supply, trade marks, patent types, origins or other means of production when writing product specifications. The exception is when the goods and services cannot otherwise be described by reference to technical specifications, which are sufficiently precise and intelligible to all suppliers. Must be accompanied by the words or equivalent. there are, however, instances where it is permissible to derogate from the prescribed hierarchy of specifications.

For example, where there exists a statutory duty in relation to, say, health and safety technical reasons of conformance incompatibility or disproportionate technical differences or disproportionate costs or innovative reasons. A technical specification is a document that defines a set of requirements that a product or assembly must meet or exceed. A product or assembly that does not meet all of the specifically expressed requirements does not meet the specification, and often is referred to as being out of specification or out of spec.

Specifications are used when a contract for technical products or services is issued. The objectives for which specifications are written were dealt with in the introduction to this session. Specification writing as used here includes the text, drawings, illustrations and sketches. The basis for development of a specification is the same as that described for writing a technical report or procedure. To reiterate the advice given throughout these articles, the steps are: plan research outline write edit review and obtain approval. Advice, however, that applies in particular to specifications is:

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Don't be vague with the use of such phrases as 'good workmanship', 'easily cleaned', 'readily accessible'. Check and re check alpha numeric references to specifications and standards quoted. Etc.' be precise in the use of language and avoid:

vague adjectives: good, fine, smooth, rough, high, low, large, small. 424 federal reporter, 2nd series, pages 25 36 376 federal supplement, pages 125 138 508 federal reporter, 2d series, pages 547 562. Now what? well, chances are that you grew up reading science fiction, dreaming of exploring and creating new worlds.