Understanding your cost per sale is imperative. You have to at least break even but, of course, it's much better to make a profit on each product or service. Although there is a place for the 'loss leader' product in some markets, you need to be very careful about how and when you use this tactic. Ask yourself, what margin do you need to achieve and then, what would you like to achieve?

Your finance department will be in a position to help you to determine all of the costs so that you can get an accurate cost of good sold. You need to make sure that you understand the costs involved in distribution, marketing, sales, customer service etc. and how they affect the cost of the goods you sell. There is no point buying in a product and selling it for cost plus 10% if the extra costs are ignored - you could be selling it for cost -10%!

Once you know this cost, you need to consider this figure with your customer, competition and market intelligence, to determine the best price to attract the required volume of sales and make a profit. You also need to work out how you can deliver a good product and great customer service that will generate regular and repeat sales.

A comprehensive review of the cost per sale of each of your current products will also help you to determine what profit margin you have achieved and assess whether that margin is line with your target.

It's well worth checking the real cost of goods sold as your profit margin may not be what you think it is!