06/10/2015
Students, here's an easier formula for your figuring overhead costs:
1. Determine replacement cost for all personal tools (irons, sewing machine, scissors, etc) used.
2. Take total cost and divide by number of projects done a year.
3. Take this amount and add to projects as tool usage cost.
Example: $500 to replace supplies, 100 projects a year. Total to add to each project is $5.
Same can be used to determine utilities cost. Take difference between extra usage for projects (water, electricity) to get step 1 cost. Also can be used to determine business development. Eg. Marketing costs for exposure projects (work done for free for exposure.)
The only wiggle room you have in price reduction (for price competition) to the client is labor cost. Any other areas, you have or will have spent money later in the year and results in loss funds.
At cost is really: material/supply costs, overhead, and business development.
Keeping going for your goals!
