What you do not see coming
Calculating cost price, margin and capacity
Why a business optimised to the bone breaks at the first unforeseen event.
Objectives
- Calculate your cost price and your real margin, including overheads
- Determine your break-even point and the room for manoeuvre that follows from it
- Assess your real production capacity, including absences and contingencies
- Make decisions knowing the cost of the safety margin you allow yourself
Programme
- Morning: The real cost of what you sell: Cost price: what is always left out · Margin, break-even point, and the threshold beyond which a discount costs you money · The quotation that protects you: terms, price revision, deposits
- Afternoon: Capacity and slack: Planning at eighty per cent: why, and how to stick to it · The full order book that masks an empty bank account · Your written decision rules: when to accept, when to refuse, when to raise prices
Prerequisites
Know your main cost items.
What you take away
Your cost price calculated and your decision rules in writing.