Blog Thread
- Ken Uchikura Newsletter Vol. 245 Business Costs
Business Costs
In a typical business, they say that one-third of your business goes to the cost of goods and services. One-third goes to sales and marketing expenses. And the last third should consist of profit.
Lower the cost of goods
To lower the cost of production, use cheaper parts and produce products in regions with lower manufacturing costs. Mechanize and streamline production to reduce labor costs and the time and tasks required for production. These are just a few examples. This is why many manufacturing companies have moved to Southeast Asia, where labor costs are lower.
However, in recent years, they’ve found that moving manufacturing to cheaper regions doesn’t actually lead to lower costs in the long run. Specifically because labor costs are rising due to how concentrated manufacturing is in those regions.
Higher selling prices for goods
The higher the selling price of a product, the higher the profit from product sales. However, it goes without saying that the higher the price per product, the less it’ll sell. To prevent this, the product needs brand power. But you can’t create a brand by doing nothing. In order to build brand power, it’ll involve some marketing work. Needless to say, marketing is part of the cost of goods.
Many company owners, especially entrepreneurs, focus on creating a good product but don’t focus on sales and marketing. They believe that a product will sell if you make it the best it can be. In reality, however, no matter how good the product is, it won’t sell if no one knows about it. To succeed, managers need to use a balanced approach to product development, manufacturing, sales, and marketing.
Kenichi Uchikura
President / CEO
Pacific Software Publishing, Inc.
ken.uchikura＠pspinc.com
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ABOUT PSPINC
PSPINC (Pacific Software Publishing, Inc.) is a technology company based in Bellevue, Washington, USA. Founded in 1987, PSPINC provides web hosting, email hosting, and other internet-related services to businesses and individuals worldwide.
In addition to its hosting services, PSPINC also offers website design and development, domain registration, and online marketing services. The company has data centers located in the United States and Japan, and it offers multilingual support to its customers.
PSPINC has a strong focus on customer service, and it has received numerous awards and accolades for its quality of service over the years. The company is committed to staying up-to-date with the latest technology and industry trends in order to provide the best possible solutions for its customers.
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