Learn How to Figure Out Your Real Cost of Manufacturing

Learn How to Figure Out Your Real Cost of Manufacturing

Calculating the cost of an item should be well studied or else you may end up paying more from you had in mind. An item that is worth a dollar may not necessarily cost that much.

Here are some tips on how to calculate the manufacturing cost so that you can project what your earnings will be.

Manufacturing Costs

You must be aware that you have to pay for the custom fees and duties. Be ready because you will encounter freight carrier fees known as Lift on Lift OFF (LILO) fees. You have to pay for the fees charged in your country and in China.

There is also fuel levy, this is the charged on the fuel used during the shipping process. Again, you have to pay for the warehouse, if it calls for it both in your country and in China.



When you are importing products from another country, they usually charge a certain fee in currency exchange. This will lessen the normal exchange rate. The rate is usually lower by 3%. The difference will be their profit.

When doing business in China, it would be advisable to open a renmenbi dominated bank account. This is open to foreigners doing business in China to help the cost incurred on the currency exchange rate. Additional expense is the fee for the import agent.

On the other hand, the import agent can give you the amount you will spend on the whole process. They will compute all the fees you have to pay and in turn, will charge you a fee for their service.

Since your shipping the product to another country, chances are you have to pay for the insurance. Add this to the cost; it will result in the increase of all the costs.

Usually the cost of getting the product in China to your place of origin can cost more or less the same if you get to manufacture the product itself.



Prediction of the Cost

It would be difficult to estimate the cost beforehand especially if this is your first time to get goods from China. During the process, you will encounter several fees to pay that you haven’t anticipated.

Always remember to compare prices between manufacturers before signing in the agreement. For sure different manufacturers have different quotes and it could make a lot of difference on your profit.

When you have the total cost of shipment of your products, you have to divide this by the number of products you have. The result will be the real price of the product per unit. This is called the landed cost per minute.

 

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