"Costing" is an important role!

An awareness of the costs of operation is an important component of the services being offered to assist SMEs to survive and grow.

In a well-organised business, “costing” is an ongoing activity, normally under the supervision of the CFO.

The costing role can guide the leadership team in the optimal business processes to maximise the return for the business. This is the reason that, in most large businesses, no decision is made on new products and product modifications until the changes have been submitted to a costing review.

This is the type of service that many SMEs require if they are going to successfully meet the challenges that 2023 is presenting.

“The prices charged by businesses are a crucial element in their health and profitability.” Thomson Reuters – Leading Australian SMEs in 2023’s Changing Economy

This report outlined examples of price tactics which businesses can use to drive growth and help build strength and resilience.

Some SMEs already operate their businesses in this manner, however many more are going to need costing assistance to meet the marketplace challenges.

Some of the activities in which the costing section could be involved include:

• An awareness of the composition of products currently being produced by the firm, so that any proposed variations can be quickly analysed, to enable the production of an adjusted price and suggested selling price.
• Monitoring what competitors are charging for similar products.
• Is the product a “star product”? Does this give the opportunity to charge a premium for this product?
• Having discussions with the leadership team on the manipulation of the product mix, to try to achieve a higher gross profit from the total product sales.

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