So what are costs of doing business?

[keggerz]

The Gas thread and some threads in the past are the reason for this post.....I will try and update it as people contribute costs....I will defer to the bean counters(Puddy) on questionable costs...and also if you can answer the following that would be great:

 

Are these costs utilized in determining pricing?

 

I will start with a few of easy ones:

 

Rent

Payroll

Advertising

Edited July 9, 2008 by keggerz

[Chief Dick]

Utilities

[Big John]

Insurance

[fingfootball]

Employee theft

[yo mama]

all costs directly impact P&L, and therefore indirectly influence price. It's the elasticity of demand that has the greatest impact on price (i.e., the customer's responsiveness to price increases and decreases, relative to alternative goods or services).

[DMD]

taxes

shipping

storage

distribution

product costs

 

there are a ton of influences direct and indirect

[Cunning Runt]

taxes

shipping

storage

distribution

product costs

 

there are a ton of influences direct and indirect

 

Ya - I was gonna say cost of materials and facilities' costs.

[budlitebrad]

Flashbacks of my managerial accounting classes back in college.

[Caveman_Nick]

EMployees screwing around on the innernets reading FF message boards.

[Cunning Runt]

EMployees screwing around on the innernets reading FF message boards.

 

Funny you say that.

 

Last year I won some tickets to a concert from a local radio station by answering this trivia question on the radio:

 

"This" is estimated to cost employers two billion dollars each fall in lost productvity time.

 

My answer - employees playing fantasy football online at work. Off to the concert I went. Think it was Mellencamp.

 

Imagine if they would have included the whole year and the time spent on these sorts of topics as well.

[nogohawk]

Pricing costs are usually broken down into various categories -

First you want to include all direct costs - Material/Purhcases, Direct labor and fringe or burden (payroll taxes, healthcare insurance, retirement plan contributions, insurances - WC and other tied to payroll or sales, etc.), and depending on the industry - any other variable costs associated with the product. For construction, these would include equipment costs (both ownign & operating), subcontractors, etc.

 

Next would be indirect costs which have both fixed adn variable components - these should be ratably allocated to the price (depending on the industry via DL $ or hours, material costs, etc.)

 

If you have selling costs, these also need to be allocated - examples would be Commissions (should be directly assigned if all products get tagged), advertising, etc.

 

Finally would be your overhead or G&A (general & administrative) - these are your truly fixed costs which don't vary substantially month-to-month. These are part of your "mark-up" as well as a portion for Profit.

 

Pretty much all your cost of doing business is included in price, but it all depends on how you capture each portion.

 

Make sure you determine your Mark-up % based on cost and not the selling price.

 

Hope this helps.

[gbpfan1231]

You could say that costs have no impact on pricing at all.

 

Should you not price your product or service at the max price where you will sell the most? YOu may sell an item below it's "cost" so that you can other other ancillary items that go with it for very high margins. You should price each and every product based on what you think is the most people will pay and where your price will also create the most demand???

[keggerz]

CC Fees

[gbpfan1231]

Make sure you determine your Mark-up % based on cost and not the selling price.

 

Hope this helps.

If you base your Mark up % on selling price would that not be an endless loop or in Excel talk a circular reference????

[TheShiznit]

CC Fees

 

I have never been a big fan of charging for CC fees. Sometimes it is those very usage of CC's that allow people to make large purchases that you ordinarily wouldn't have gotten. For example, when I was in college, I ran an off course pro-shop....golf. If we didn't accept CC's, I think we would have had like 55% less business. At the time, we paid 1.8% for each transaction to US Bankcard Services...or something like that. A small fee for the added sales. Now, we never took American Express because they used to charge something like 4%.

 

Anyway, one could argue that without the CC business, you would have less business....and I think that would be a correct and easy claim to defend.

[Fatman]

Funny you say that.

 

Last year I won some tickets to a concert from a local radio station by answering this trivia question on the radio:

 

"This" is estimated to cost employers two billion dollars each fall in lost productvity time.

 

My answer - employees playing fantasy football online at work. Off to the concert I went. Think it was Mellencamp.

 

Imagine if they would have included the whole year and the time spent on these sorts of topics as well.

 

Always amazing to hear similar estimates around March Madness time.

[TheShiznit]

Funny you say that.

 

Last year I won some tickets to a concert from a local radio station by answering this trivia question on the radio:

 

"This" is estimated to cost employers two billion dollars each fall in lost productvity time.

 

My answer - employees playing fantasy football online at work. Off to the concert I went. Think it was Mellencamp.

 

Imagine if they would have included the whole year and the time spent on these sorts of topics as well.

You called from work didn't you....admit it!!!!!

[keggerz]

I have never been a big fan of charging for CC fees. Sometimes it is those very usage of CC's that allow people to make large purchases that you ordinarily wouldn't have gotten. For example, when I was in college, I ran an off course pro-shop....golf. If we didn't accept CC's, I think we would have had like 55% less business. At the time, we paid 1.8% for each transaction to US Bankcard Services...or something like that. A small fee for the added sales. Now, we never took American Express because they used to charge something like 4%.

 

Anyway, one could argue that without the CC business, you would have less business....and I think that would be a correct and easy claim to defend.

see you agree with me....CC Fees are a COST OF DOING BUSINESS....therefore inherently if your margin is going to be low enough then you know you need to build the fees into your price...but charging a customer more to use a CC, imo is just bad form....and charging your waitstaff for the CC % of their tip is even worse :oldrazz:

Edited July 10, 2008 by keggerz

[SEC=UGA]

And changing all of of your "men working" signs out for the appropriate gender neutral ones.

[TheShiznit]

And changing all of of your "men working" signs out for the appropriate gender neutral ones.

 

Aside from cost....what is wrong with that....really....what is wrong with it. If you were a road worker and it said Women Working....and you were a guy....would you be offended? Would you feel uncomfortable.

 

I don't think I would be a proponent of changing all the sign out if there is nothing wrong with them....but clearly, when the signs get all bent out of shape....replacing with more correct vernacular would seem socially prudent...would it not?