05/07/2025
Smarter Product Costing for Small Businesses
Most business owners engaged in production, kasali na yung mga nasa food and beverage businesses would start with the Product Cost (Direct Materials, Direct Labor and Overhead) then papatungan nalang nila based on their desired margin to arrive at the selling price.
Gagawa sila ng multiple batches of the prototype hanggang sa makuha yung pinaka-magandang version.
Typically, ini-ignore din muna yung production cost to ensure the quality and sa serving size and mark-up nalang mag-aadjust to manage the selling price.
There's nothing wrong with this approach naman but if you noticed, the selling price appears to be accidental and NOT intentional.
Lumobo yung price because ginawa mong better quality yung product and thus, gumamit ka ng mas mahal na ingredients, equipment and employed more value-adding activities.
And by the time na ibebenta mo na siya, two things usually happen:
1. It's already beyond the capacity of your market and mahirap na siyang ibenta, or
2. Maliit na yung patong mo which is no longer enough to cover your other expenses.
So what's the alternative?
Start with the PRICE!
If you've studied your market diligently, may mga market segmentation ka na, target market and a planned product positioning, then may idea ka na kung magkano yung price na kaya and willing bayaran ng mga prospects mo.
Kunwari na determine mong P250 yung kaya ng market for your product. Since may mga computations ka ng ginagawa, for sure may target margin ka na rin na 60% to cover everything and be profitable.
This 60% margin will give us 40% in product cost (1.00 - 60%).
P250 * 40% (cost) = P100
This will mean na P100 yung magiging target cost mo in order to be profitable.
Maghahanap ka ngayon ng mga ingredients and methods that will produce the desired product at that cost. You'll be more creative, innovative and intentional with it.
Of course, priority parin natin ang product quality pero since may target cost ka, there will be some compromise along the way.
At the end of the day, nag-business tayo not just to give a quality product and service sa market but also to make PROFIT!
