COSTING
AND
PRICING
PRODUCT
BY JUDY LAYNE
INTRODUCTION
TO COSTING
AND PRICING

COSTING YOUR PRODUCT CORRECTLY IS VERY
IMPORTANT.

INCORRECTLY COSTING YOUR PRODUCT CAN
LEAD TO EITHER UNDERPRICING YOUR
PRODUCT WHICH WILL LEAD TO LOSS PROFITS
OR OVERPRICING THE PRODUCT WHICH CAN
LEAD TO LOSS SALES.

HERE IS YOUR GUIDE TO COSTING YOUR
PRODUCT/S.
COSTING
HERE ARE A FEW SIMPLE
THINGS TO REMEMBER
BEFORE COSTING THE
PRODUCT
•
Any costs that goes into making your
product is called product costs.
•
Your product costs Involves:
•
Total Direct Labour – The wages you pay to
yourself or others directly involved in making
the product
•
PLUS
•
Total Direct Materials – Costs of raw
materials which go into making the product
•
PLUS
•
Total Direct Overheads – for example,
The cost of any gas, electricity, water, and such
like that would have gone into making the
product.
COSTING MY
PRODUCT
NOW HERE IS THE FORMULA
FOR COSTING MY PRODUCT
 TOTAL
DIRECT LABOUR
+ TOTAL DIRECT
MATERIALS + TOTAL
DIRECT OVERHEAD
COST/TOTAL UNITS
PRODUCED=THE COST
TO PRODUCE ONE UNIT
BUT I AM SERVICE
BUSINESS. HOW DO I
COST?

DON'T PANIC!

SIMPLY ADD YOUR DIRECT COSTS AND
YOUR INDIRECT COSTS FOR THE
MONTH AND DIVIDE THE TOTAL BY THE
NUMBER OF CLIENTS YOU EXPECT TO
RECEIVE FOR THE MONTH. THIS WILL
GIVE YOU THE COST PER CLIENT
NOW HOW DO I PRICE?
I am adding a link that will be very
helpful in aiding your group to
determine price of your
product. Please go to:
https://www.entrepreneur.com/ency
clopedia/pricing-a-product
I am also adding 2 interesting
youtube videos. One is pricing an
airbnb:
https://www.youtube.com/watch?v=
OnSFsUekD9Q
One is pricing restaurant product:
https://www.youtube.com/watch?v=
JdDTClEWZRM