Etini
Valued Contributor
One of the cost components that is often overlooked and omitted when calculating the price to sell a product is always the amount spent on rental of the business premises. Maybe, this is majorly because most enterpreneurs don't know how to calculate the ideal cost per unit incurred to rent a space for production.
To know how much you should add as a cost component from rent to the price of a product, you would need to know the total volume of products made during the period that the rent runs. You would have to divide the amount you pay as rent for the business premises by the total number of products done within that period.
For instance, a business that produces 1000 units of it's products within one month has a rent of $1000 a month. The rental cost to be added to the prices of products would be
$1000/1000 units which equals $1.
That means the business should add $1 per product to cover up for the rents.
To know how much you should add as a cost component from rent to the price of a product, you would need to know the total volume of products made during the period that the rent runs. You would have to divide the amount you pay as rent for the business premises by the total number of products done within that period.
For instance, a business that produces 1000 units of it's products within one month has a rent of $1000 a month. The rental cost to be added to the prices of products would be
$1000/1000 units which equals $1.
That means the business should add $1 per product to cover up for the rents.