Budgeting and Pricing for a Real Business Project

Objective

To develop practical skills and communication skills in creating budgets and pricing strategies by applying theoretical knowledge to a simulated business project using real-world data.

1. Choose a Business Project (Startup business project)

Select one of the following options:

• A retort food production
• A handmade or craft production
• A merchandise production

(Within the chosen product type, each group must identify one product to be analysed.

2. Define the Scope of the Project

Write a brief summary covering:

• Business name and type of business
• Target market
• Products/services offered
• Business goals (short-term and long-term)
• Menu and preparation of products (ingredients or materials, and preparation)

3. Gather Real Facts and Figures

You must collect real-world data from reliable sources to justify your budgeting and pricing. Include:

• Market prices of key materials or services (get quotes or use supplier websites)
• Operational costs (rent, utilities, labor, marketing, etc.)
• Competitor pricing (research prices of similar products/services)
• Sales projections based on comparable businesses or industry benchmarks.

Sources may include interviews, surveys, official websites, online pricing tools, or publicly available business reports.

4. Create a Budget Plan

Build a detailed budget for the first 2 years of operation (prepared monthly for each year).

Note: Use spreadsheets (Excel) to prepare budgets, tables and calculations clearly. Copy the table to your final report.

5. Develop a Pricing Strategy

Using the data and budgets that you have prepared, explain:

• Your pricing method (e.g., cost-plus, value-based, competitive)
• How prices cover costs and contribute to profits
• Justification for your price points
• Impact of pricing on customer behavior and competitiveness

6. Submit a Final Report

Prepare a report that includes:

a) Cover page

b) Table of content

c) Business and market overview – Write a brief summary covering:

• Business name and type of business
• Target market
• Products/services offered
• Business goals (short-term and long-term)
• Menu and preparation of products (ingredients and preparation)

d) Financial Plan – Master budget includes all budget breakdown (from sales budget until Balance Sheet), with all detailed assumptions and supporting table/schedules are clearly provided.

e) Pricing analysis and rationale

f) Appendix – Data sources and references (include proofs such as photos and other references of product, materials, location, price research, interviews, etc.)

Experts Answer on Above Questions on Business Project Analysis

Business project selected – homemade sambal production

About business – the business is known as Sambal Warisan Enterprises and it is primarily in the business of homemade food manufacturing. The target market of the company includes working adults, university students and online food shoppers in Malaysia. The product offered by the company includes Sambal Bilis (250g) and Sambal Petai (250g). The short term goals of the company includes achieving a target sales of 500 jars on a monthly basis, and achieving significant brand awareness through Shopee and TikTok shops.

The long term goals of the company includes performing expansion into supermarkets such as Lotus and obtaining Halal certification. In preparing its product, the ingredients that are used include dried anchovies, chilli paste, onion, garlic, cooking oil, sugar and salt. The preparation process includes frying anchovies until they become crispy, cooking chili paste with onions and garlic, mixing ingredients, performing the packaging process in sterilized jars and seal and label products.

Real facts and figures

The material cost in preparing a jar of 250g includes anchovies @ RM 2.50, chili paste @RM1.20, onion and garlic @.80, oil and seasoning @.70 and Jar and labeling @1.50. This amounts to a total direct cost of RM 6.70.
Along with this, the monthly operational cost includes rental cost of small kitchen @RM1200 PM, utilities @RM300, labour @ RM2500, marketing @RM500, delivery and miscellaneous expenses @RM500 which amount to a total of RM5000.
In respect to the pricing strategy of competitors, the prices charged by Sambal Nyet are RM15.90, Sambal Hijau House @RM17.50 and local homemade sellers @RM13-RM16.
Sales Projection
It is expected to get an average sale of 500 units per month at a selling price of RM15 amounts to a total sales revenue of RM7500 pm and yearly, it will be RM90000.

Budget plan

The revenue from sales is RM7500 whereas the cost of goods sold is RM3350 which amounts to a gross profit of RM4150. The operating cost is RM5000 and there will be a net loss of RM850 in the first year. For the second year, it is expected to sell 800 jars per month which would amount to a revenue of RM12000, cost of goods sold is RM5360 which will amount to a gross profit of RM6640. The operating cost is RM5500 and net profit will be RM1140.

Pricing strategy

The pricing strategy suitable is cost plus pricing because the market for homemade sambal brands is very competitive in Malaysia, and cost plus pricing is also highly suitable as it covers both the production and operating cost, and provides significant profit margin for business growth. The pricing of RM 15 is also affordable to middle income Malaysian consumers, and it will definitely encourage repeat purchases through perceived value.

Want Detailed Answers with References?

The analysis of startup cost, competitive pricing, budgeting assumptions and pricing methods to support the business profitability above revealed significant findings about the selected homemade Sambal production business. If you need a similar kind of business project analysis, connect with our management experts to get best assignment help in Malaysia from professional experts.