Cost Analysis - Small Shop
It is impossible to set any kind of logical prices without understanding what something costs to produce. So the first big question has to be: what does it cost to run your business and how does that translate into the cost of generating products?- You can have this calculation sheet added to and hidden on your own website, where only you can see and use.
- Also take a look at: product pricing calculator and our Profit margin calculator wheel
- Alternatively, complete and print this page using button at the bottom of form
Calculation Of Yearly Business Expenses
Identify your recurring operational charges some of which are fixed (F) and some of which are variable (V). Update the data monthly to keep it current. Note that charges such as cost of goods, credit card processing fees, rush fees, shipping, etc which are attributable to individual jobs, should be charged specifcally to those jobs rather than incorporated into the calculations for overhead.| Description | Type | Monthly | Yearly |
|---|---|---|---|
| Equipment Financing (loan/lease/credit card) | F | ||
| Rent | F | ||
| Office Phone | F | ||
| Cell Phone | V | ||
| Utilities - Electrical, Water, Sewer, etc. | V | ||
| Health Insurance | F | ||
| Business Insurance | F | ||
| Property Tax | F | ||
| Bank Service Charges / Fees | V | ||
| Office Supplies | V | ||
| Office Equipment | V | ||
| Consumable Production Supplies - ink, paper, etc | V | ||
| Internet Access | F | ||
| Advertising / Promotion | V | ||
| Product Samples | V | ||
| Owners Draw (paycheck) | V | ||
| Total Yearly Expenses: | |||
Calculation Of Weekly, Daily And Hourly Operational Costs
The
end goal is to determine the hourly cost of operation, which is very critical
for performing several different cost and pricing calculations. In addition, it
becomes a production target goal which makes it easier to track whether your actual
production is on target to meet your goals.
| Operational Weeks Per Year | (weeks) | |
| Weekly Cost of Operations = $ | ||
| Operational Days Per Week | (days) | |
| Daily Cost of Operations = $ | ||
| Operational Hours Per Day | (hours) | |
| Hourly Cost of Operations = $ | ||
Calculation Of The Cost Of Producing Products
The
cost of a pressing/printing an item is simply a function of knowing how many average
units you can produce per hour versus the hourly cost of operation. However this
is not real life pricing as your production capacity and your actual production
will vary depending upon job size, production efficiency and sales volume. In
fact, it doesn't matter how efficient you are, if you don't have the sales to
support the numbers, your production cost per item is going to go up, because
your average output per hour is going to drop.
| Pieces Per Pressing | (pieces) | |
| Average Print/Press Time | (minutes) | |
| Average Achievable Production Minutes Per Hour | (minutes) | |
| Total Hourly Piece Production Capacity | (pieces) | |
| Minimum Cost To Print/Press 1 Item = $ | ||
NOTES
1. The numbers thus far assume you are making all of
your income strictly from printing/pressing which is not typically true for most
shops as they sell substrates and printing.
2. The numbers thus far don't accurately
show pre-production and post-production times.
