New product cost analysis calls for a detailed assessment of the price that might be ascribed to a newly launched product depending on its market status and expected estimate pay off. The analysis serves as a crucial tool in the new product development process as it analyses its product value, predicts the impact it might have on the market, the revenue it might generate and thereby helps in determining the pricing of the new product.
Sample New Product Cost Analysis
Name of the product: Brushwell Toothpaste
Manufactured by: Brushwell Gear Company
Analysis Conducted by: Sheldon Cooper
Product to be launched on: May 10, 2012
Product Description: The new Brushwell Toothpaste is all set to be launched on May 10, 2012. The toothpaste is designed to give one a rejuvenating brushing experience. It has been clinically proven to be effective in fighting germs and cleaning the mouth. The toothpaste also has as its USP a refreshing smell that would give one a freshening mouth wash.
Manufacturing Cost: An estimate of 12$ is accounted as the total manufacturing cost of the product. The details of the estimate are as follows:
- Ingredients: 6$
- Manufacturing Process Charge: 4$
- Labor charge: 2$
Marketing Cost: As the product is about to be launched it requires to be extensively promoted. An estimate of 35$ is allotted for its marketing. These include:
- Advertising Billboards: 8$
- Celebrity Endorsement: 10$
- Print Advertisements: 6$
- Television Promos: 9$
- Handbills: 2$
Profit Expected: Market survey and sample tests of the product reveal that the product when introduced may generate revenue of 16$ per product.
Price Quoted by Competitors: The chief competitors of the company are Freshmouthwash Company and Awesome Toothpaste Private Limited. The prices quoted by them are:
- Freshmouthwash Company: 14$
- Awesome Toothpaste Private Limited: 12$
Suggested Pricing: It is advisable to keep the price band of the new product within the range of 11-15$ for best results.