Login / Register

For access to our resources you must login below to access your Toolbox. If you are yet to obtain login details, you must first register with NDI, which you can also do below.


Login

For access to our resources you must login to your account below. If you are yet to obtain login details, you must first register with NDI.


Register

If you have already obtained login details, then please login with your email and password. If you have not yet obtained login details, then please register below.



Continuez

Costing Add to toolbox

Back

When calculating the costs in your business one of the first things to consider is the cost of producing your product or service. 

These costs need to be calculated on a monthly basis, or depending on the volume of your sales and how often you will need to buy the materials in order to help you deliver your product/service to your customer.

There are methods and techniques for this:

  • First you need to decide if you are going to work out these costs or have a dedicated accountant that can either do this for you full time or a weekly/monthly basis - You VS Accountant. You can also hire accountants as and when you need them, by hiring freelancers you can find online such as here http://www.freeagent.com/accountants/accountants 

  • Second – you can do this manually yourself, using Excel or purchase a digital accounting package such as SAGE . This has become increasingly easy as packages don’t have to be bought at their full price, membership on a monthly basis can be purchased for these systems.

Essentially you need to calculate what your full costs are in order to ensure the amount of revenue that you have coming into the business is able to cover this cost as well as having some money left over to pay yourself, or your investors or invest back into the business in order to improve and grow your business.

There are 3 costs involved in calculating the TOTAL COSTS:

  • Direct (Variable) Costs - costs that go up in direct proportion to volume, such as the amount of materials youpurchase in order to create your service/product

 

 

 

 

  • Fixed (Overhead) Costs- these do not change with volume - they have to be covered whether you make zero or amillionunits. Examples include rent and insurance.

 

 

 

 

 

  • Semi –Variable Costs - costs that change with volume, but not in direct proportion, a significant change in volume will have to happen in order for this cost to go up, anexample is a utility bill such as lighting.

 

 

 

 

 

 

Its crucial for you to understand what these costs are, how they are calculated and how they can change. For example they can increase or decrease according to the economic situation in the city and country you are selling your product/service and the city/country you sourcing your materials from. 

Here’s The 5 Biggest Mistakes Small Business Owners Make With their Accounting Records.

 

Once the  above costs have been added up they can be taken away from the Total Sales/Total Revenue figure for the month and you can see how much net profit you have left over.

 

 

 

 

Resources