Know your cost build-ups!

Published on 3 October 2023 at 09:40

Product costs and sales prices consist of many different factors and can be structured in many ways. Often, sales, finance, engineering and procurement each approach pricing and costing in a completly different way within the organisation. ๐“๐จ๐ฉ-๐ƒ๐จ๐ฐ๐ง ๐ฏ๐ฌ. ๐๐จ๐ญ๐ญ๐จ๐ฆ-๐”๐ฉ ๐š๐ง๐š๐ฅ๐ฒ๐ฌ๐ข๐ฌ ๐ฉ๐ซ๐จ๐ฏ๐ข๐๐ž๐ฌ ๐œ๐ฅ๐š๐ซ๐ข๐ญ๐ฒ and will get everyone on the same page again.

๐๐จ๐ญ๐ญ๐จ๐ฆ-๐”๐ฉ shows the current cost status. It's calculated from the cost of materials, manufacturing, labour and overheads based on the product design

๐“๐จ๐ฉ-๐ƒ๐จ๐ฐ๐ง dictates the maximum a product should cost based on the market, pricing strategy and the cost of sales.

Depending on your market, organisation & strategy, either Top-Down or Bottom-Up is leading and will determine the other. However, the essence is simple: ๐˜ฌ๐˜ฆ๐˜ฆ๐˜ฑ ๐˜ต๐˜ฉ๐˜ฆ ๐˜‰๐˜ฐ๐˜ต๐˜ต๐˜ฐ๐˜ฎ-๐˜œ๐˜ฑ ๐˜ค๐˜ฐ๐˜ด๐˜ต๐˜ด ๐˜ญ๐˜ฐ๐˜ธ๐˜ฆ๐˜ณ ๐˜ต๐˜ฉ๐˜ข๐˜ฏ ๐˜บ๐˜ฐ๐˜ถ๐˜ณ ๐˜›๐˜ฐ๐˜ฑ-๐˜‹๐˜ฐ๐˜ธ๐˜ฏ for a healty business!