Step 2: Work out your ‘Variable Costs’

Your ‘Variable Costs’ are costs that change depending on how many products you produce. Your variable costs will include things like:

  • Materials
  • Labour costs – estimate the time you are going to work on producing the product and put a cost against this
  • Packaging

When you know your ‘Overall Variable Costs’, you need to work out what your ‘Variable Costs Per Unit’ is.