Material Costs: Usually up to 25% of the total costs. Includes the cost of wood and hardware such as hinges, accessories, fasteners, mechanical parts, etc.
Labour Costs: Hourly production labor wages multiplied by the total number of hours it may take to complete the job. This can make up to 50% of the total project costs.
Overhead Costs: Includes the rental and utilities of equipment, tools, glue, sandpaper, shop, finishing material and more. Overhead is usually 15% of your material and labor cost.
Selling Costs: Selling costs are used to cover the cost of sales and admin staff, time spent, plus commissions or bonuses.
Profit Costs: Yes, you heard right – add profit as an expense. Once you’ve calculated the accurate manufacturing cost for your product, set your sell price markup as an expense. For example, a $1,000 project at 20% margin should be $1,250 - not $1,200.
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