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| Posted on 11/5/09 at 02:22 PM | |
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Every business has ro know what it costs him to run his business and make a profit. All business operates the same, you have fixed expenses ( overhead) you have labor and material costs.You figure your overhead and labor costs to operate 40 hours per week, devide that figure by the total man hours you have to earn that money. Its a matter of doing the math, in figuring costs per hour plus knowing how much production you can do in an hour. I can't explain this in one easy lesson but you need to come up with a selling price of your product including your desired profit. Materials are usually charged off to the buyer at cost or with a percentage added on for spoilage. ou have two ways to stay with your competitors, if your figures show your low in selling price you raise your selling price to match his price or stay low as long as you make your desired proit. If your figure shows your to high for the compition, then you must reduce your expenses and labor costs to bring yourself in line. It all boils down to the math, what it costs you to work for an hour, add a profit for the business and collect that amount from your customer. One hour with an accountant would probably be the best money ever spent. | |
 
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