If you want to make a profit you have to understand the relationships of margin, fixed and variable costs.
Low margin goods mean you have to sell higher volumes of goods or services. This means that your overheads with marketing cost increase! Conversely, high margin goods and services require less volume and have smaller overheads. Overheads sometimes behave in strange ways and some could be seen as stepped.
It's important that if you don’t understand how costs behave that you get expert advice to assist you!
The systems that you put in place are important to monitor costs for budgeting and reporting purposes.
Your marketing costs will behave in different ways for each type of product so a one size fits all approach may not work!
All of these items together with your existing costs and living costs need to be taken into account to ensure that you have a breakeven pint and that you have sufficient money to start the business to get it up and running!
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Half of Team NZ Anywhere Business Network