Share on facebook
Share on twitter
Share on linkedin

How to Do Product Costing & Pricing Before Manufacturing

This article is a simple overview of how we establish standard pricing and product costing system for our clients. Our professional product costing method/s help improves lead times and reduce costs.


manufacturing solutions -product costing 2

One of the most heavily-availed manufacturing services out there is product costing. However, not everyone who offers this service are really keen and detailed in getting the task done. We make sure products are priced the right way which is why we have established a product costing system for all our major clients.

Components of Product Costing

  1. Material Expenses

This component must be the basic when it comes to in calculating product costs since material expenses is where most of the capital goes in terms of production. Material costs also include freight expenses, storage fees, import duties and other expenses directly attributable to material acquisition.

  1. Labor Expenses

This component involves overhead labor costs and all the personnel costs required to get the product done. Salaries, payroll costs and third-party services fall under this category as well.

  1. Factory Overhead

These are expenses that cannot be categorized under direct material costs nor labor costs but are still vital to manufacture the final product. This component may include manufacturing supplies, utilities, rentals, repairs and other indirect material or labor expenses.

  1. Taxes, Duties and Fees

When we started our business sourcing solutions, taxes, duties & fees used to be minor factors but have come to play a crucial role when we started doing business in China. Unlike most countries, China has a very complex structure when dealing with their customs. Even though they also apply the 3 main type of taxes (value added tax or VAT, consumption tax and custom duties) for importing products much like in most countries, the rules for each type of tax are very much different compared to what is traditional in other countries.

This is why you need to have complete understanding of the customs fees you will be paying: so you can incorporate them as part of your costing system.

product costing requires the right formula

Why Avail of Our Product Costing Services?

Product costing requires strong attention to detail and analysis, because Asian companies handle components and materials different than their Western equivalents. Intrepid Sourcing is a manufacturing solutions company experienced in costing systems and is capable of providing your company with a detailed breakdown of your product.

By relaying the product pricing and costing process to us, you can smoothly check the cost of your newly designed product without a hassle. Intrepid Sourcing will lead you to the OEM companies with the best costing and pricing. This means you won’t have a hassle with your specifications. Our product costing system makes sure that you get a reliable final production price for different quantities.

  • Consider All Components: A custom design requires a custom product costing system with pricing from a number of suppliers. Each supplier will have their own standard costing and pricing. While this complicates the product costing process, our manufacturing expertise helps understand how each component effects your product costing system.
  • Reduce Your Cost: Analyze and compare suppliers to receive the most accurate pricing and costing. Our standard costing methods will help you customize your system to reduce costs. Working within our costing framework gives you the lowest cost for the product you want.
  • Improve Your Lead Times: Did you know, most SMEs often get bogged down by complicated costing and product pricing? We provide a detailed analysis that allows you to adjust to the most efficient lead time for all components and final assembly with our costing system.

The Product Costing Process

Why it Matters

The case for costing is that you are addressing the final price with the development costs of a new product, which means things are more complex than traditional costing. It ensures your product will meet project budgets and be affordable. However, achieving your goal may be difficult given the number of the suppliers needed.

Battling through all the quotes is challenging for the uninitiated, but with Intrepid Sourcing’s costing process, it doesn’t need to be a stressful experience. With so many factories from which to choose, we will help you break down different suppliers for different parts in our costing process. Remember, you are going to face quote after quote which are often loaded with “standard costing and pricing”. This generally means that costing and pricing is an extensive process.

You can also check out this great article on manufacturing costing and a sample of costing breakdown.

Want to Combine Services?

Optimizing your costing structure is a smart business decision, but only when a proper approach is taken to your product costing initially. We help across every aspect of the product outsourcing process, ensuring that you have access to the best manufacturing product costing and pricing that can handle what’s required by you.

Each project requires customized attention. You can choose standard packages or go for a personal-driven solution. Make the best combination for your success and we will deliver it to you with great care!

See our Manufacturing Solutions

Like this article?

Share on facebook
Share on Facebook
Share on twitter
Share on Twitter
Share on linkedin
Share on Linkdin
Share on pinterest
Share on Pinterest

Come Visit Us!

United States
Do NOT follow this link or you will be banned from the site!

Learn From the Pros, It's Free.