Establishing the total cost of your product or job is crucial. If you don’t know that how can you arrive at a selling price and know you are making a profit?
It is usually fairly easy to ascertain material and labour costs, but what about all the other overheads your company incurs that are necessary to keep the business operational. I am talking here about rent, rates, software, insurance, motor expenses, utilities etc.
How can you charge a fair proportion of those overheads to arrive at the overall total cost?
There are a variety of methods you can use and which one is best will be determined by the type of industry you are in and whether you are labour or capital intensive.
I fully understand most business owners didn’t go into business because they love numbers, but if you arrive at a selling price only considering the material and labour costs without a great deal of thought given on how to allocate a proportion of all your other costs this is leaving money on the table.
Getting the right support and help will make sure that doesn’t happen.