Variable costs are costs which vary with the number of units you produce e.g.These costs will need to be covered by income if you are to reach a break even figure. once sales exceed a certain point regularly, you may need to rent larger premises. Of course, many of these costs will have a cap in the long term i.e. These won’t increase with increased sales. A fixed cost is a cost which will stay the same for that period regardless of how well the business performs e.g rent and business rates.E.g if you are going to have meetings with new clients, where are these going to take place? How will you get there? Who will pay for the coffee? All of these costs will need to be budgeted for to ensure you stay in control of your costs.Ĭosts can usually be split into two categories: fixed costs and variable costs. It is important to factor in all of the costs the business may incur and not just the obvious ones such as materials and rent.
We have created a Budgeting template to help you – to access a copy scroll down to Download: Budgeting template. what is the maximum number of units you could produce during the month using your initial resource – remember you only have so many working hours each day. Speak to other people working in the same field to get an idea of realistic sales volumes and also think about your own capacity e.g. Also consider other discounts you may offer.īe realistic when you are doing your budget about how many products you think you will actually sell each month, not what you want to sell each month. You may want to offer introductory discounts to your customers to make them aware of your products to begin with, so make sure you consider this. It is useful to start by thinking about the different products the business is going to sell and the prices you are expecting to sell these items at.