A fashion designer, Maya, messaged me at 1am.
"I have 40 orders this month. I still can't pay my rent."
She worked until midnight every night. She was exhausted.
Her customers loved her designs. They kept coming back.
So she did what we all do. She worked harder.
Late nights. More orders. Rent almost due.
I asked her one question. "What does one outfit cost you?"
"The fabric is ₦9,500." That's all she knew.
She never added her labour, weaving, the rising maintenance cost of her machines.
When she finally added everything, what she discovered was shocking.
Her outfit sold for ₦18,000 cost her ₦24,500.
She was losing ₦6,500 on every outfit.
The more she sold, the more money she lost.
Maya wasn't running a business. She was paying customers to wear her work.
Painful.
What was she missing?
In business management, we call it the "unit cost of sale".
It's everything it costs you to sell one item. It has two parts.
The first part is what you spend to acquire each item you sell: materials, packaging, delivery fees and so on.
The second part is what you pay to keep your business running: rent, electricity, internet, repairs, etc. This is the part most business owners forget.
So how can you find your "unit cost of sale"?
List everything a single item costs you.
Add it all together. That's your real cost.
If your selling price is lower, increase it.
If you're not sure how much to add, ask me. I'll share an idea.
About the author:
Making more profit comes down to three things: better pricing, more sales and more visibility.
Hi, I’m Nonye. Happy to meet you.
Every day I share a short story for business owners. Using real numbers and simple English.
The stories come from business owners I’ve worked with. I explain business concepts that help them make more profit.
100+ business owners helped so far.
If you’re a business owner this will help you.
Start here → nonyeroseline.com