Comprehensive Cost Breakdown

Are you aware of the hidden costs in your product's raw material? : : Accurately calculating raw material costs is a cornerstone of should-cost modeling. By effectively identifying the materials required, determining the cost per unit, and accounting for potential waste and additional costs like handling and transportation, you can develop a comprehensive and reliable cost model. Key Parameters for Should Cost Process in Material Calculation: # Raw Material Identification: ·  Material type and grade ·  Material source/origin # Material Quantity: · Required quantity (per unit or batch) · Packaging units # Material Cost per Unit: · Supplier quotes · Market prices · Historical data · Discounts and bulk pricing # Material Waste or Loss: · Scrap/waste factor ·  Defects and rejections # Handling and Storage Costs: ·  Material handling · Storage costs (rent, insurance, utilities) · Inventory management # Freight and Transportation: ·  Shipping costs · Delivery method (air, sea, road) ·  Customs and tariffs # Lead Time and Order Frequency: · Lead time variations · Order volume # Supplier Terms and Conditions: · Payment terms · Return and warranty policies · Exchange Rates (For Imported Materials) # Material Substitution and Alternatives: · Substitute materials ·  Material optimization # Environmental and Regulatory Factors: · Recycling or sustainability initiatives · Regulatory compliance # Operational Overheads Related to Materials: · Processing costs · Energy costs ------------------------------------------------------------------------------------- # Ask Yourself: -> Did you consider the net weight and gross weight calculation properly? -> Did you consider scrap weight and scrap cost in your estimation? -> Do you have access to the global raw material index and recent material price database? -> Have you asked your supplier about the raw material cost per kg as well as the scrap cost per kg? -> Do you consider Manufacturing overhead (MOH) and inventory cost (raw materials)? -> What about the scrap cost percentage based on different commodities? -> Did you optimize material through strip layout, nesting, cavity, and other techniques? -> What’s your strategy when the supplier asks for material cost increases due to market fluctuations? -> Did you consider the volume/batch/MOQ impact, as well as regional cost impact, in your calculations? -> Did you consider any coating and primary requirements in the raw material stage? -> Commodity-Specific Considerations, etc.

Most people don’t understand what it actually costs to build tract homes in 2025 — or why larger builders keep winning. Here’s a real cost breakdown from a subdivision we’re looking at in the High Desert (Socal) 👇 Step 1: Getting to a Finished Lot — $120K per lot $75K – Horizontal improvements (grading, utilities, streets, curb/gutter, offsites) $20K – Water + sewer connection fees $25K – City impact fees (parks, drainage, admin) Step 2: Building the Home — $360K per unit $360K – Vertical construction (2,400 SF @ $150/SF) Plus: $10K – School fees $5K – Permits $10K – Architecture, MEPs, energy calcs $30K – Financing (carry, fees, interest at ~10%) Total All-In Development Cost: $535K per home At a $625K sale price, that leaves just $90K margin — if you paid $0 for land. ➡️To hit a 20% return, your land basis has to be $0. ➡️In reality, it's a negative land residual. That’s the harsh reality for smaller builders using expensive capital and market-rate subs. Now let’s look at the same deal for a larger builder: ➡️They build at $130/SF (even less for many of the publics), not $150. ➡️They finance at 6%-7% interest, not 10% today ➡️Their financing cost is closer to $13K per lot, not $30K. That means their all-in cost is closer to $488K per home. At a $625K sale price, they clear $137K of margin. To hit a 20% margin, they can afford to pay ~$132K total for land + horizontal improvements. If improvements cost $120K, they can still pay $12K for the land - even more if they lower their margins. You’re not just competing on land. You’re competing on: ➡️Sub pricing ➡️Financing terms ➡️Carry time ➡️Plan efficiency ➡️Overhead ➡️And build speed So how do smaller builders stay in the game? ➡️Lock land off-market — before the big guys even see it ➡️Add value through entitlement ➡️Phase construction — don’t overextend ➡️Operate lean — repeatable plans, low friction ➡️Underwrite like a machine — the only thing that protects margin is discipline The takeaway? The game isn’t just about building homes. It’s about understanding every variable — land basis, construction cost, financing, and absorption — and aligning them perfectly. That’s how you make deals pencil in 2025. And that’s how you compete when the margins are razor thin. Let’s connect: If you’re a builder, investor, landowner, or just thinking about how to make deals work in this market — shoot me a message. Happy to trade notes, share what we’re seeing, and collaborate where it makes sense.

"Why are you raising money?" It's easily my most asked question, and to be honest I usually know the answer before I've asked it, but it's great hearing the responses. If you’ve ever wondered where the money REALLY goes between pre-seed and Series A, here’s the breakdown, based on real data across Europe. 1. People dominate the budget Salaries, hiring, and recruitment costs eat up 50%+ of early funding. The founders often pay themselves modestly, but key hires (engineering, product, and leadership roles) make this the single biggest expense. 2. Building product is next 30–40% of funding goes into product development and R&D — especially for deep tech and SaaS companies. This includes dev work, design, infrastructure, prototyping, and testing. I wonder how low this will go over next few years due to AI? 3. Marketing is where things shift At seed, most startups spend very little on marketing. But by Series A, 20–30% of the round can go straight into customer acquisition. Startups are expected to scale growth quickly — so this is where paid ads, content, CRM tools, sales hires, and GTM strategies show up. 4. Operations and Infrastructure Think cloud hosting, SaaS tools, dev software, IT setup. Thanks to startup credits and modern tooling, most startups keep this lean — around 5–15% of total spend depending on complexity. 5. Legal, Compliance, Admin This includes legal fees, accounting, insurance, data protection, and any regulatory requirements. These costs spike during fundraising or contract negotiation, but typically stay in the 5–10% range overall. 6. Office and admin overhead is shrinking Pre-2020, rent was the #2 cost. Now? It’s closer to 3–5%, with remote work, coworking spaces, and lean ops setups being the norm across Europe. → Your budget isn’t infinite — treat marketing and hiring like high-leverage investments, not default checkboxes. → Get clear on your business model before scaling spend. → Make sure your burn reflects your actual stage — not what others are doing. → A great product still needs great distribution — spend accordingly. → Keep legal, admin, and ops tight — they matter, but they shouldn't steal runway. This is how funding gets spent...whether you plan for it or not. So plan for it.

We act like the only way to reduce healthcare costs is by cutting services. But the answer isn't always subtraction. Take this example: Same patients. Same health system. Just better use of resources. 🔎 The program: - Focused on people with dementia in Medicare Advantage -Provided structured care coordination + caregiver support Cost: $475.80 per member per month Total annual investment: $5,709 per patient Sounds pricey until you run the numbers: 📉 Emergency department costs down $27.46 PMPM 📉 Outpatient costs down $233.46 PMPM 📉 Professional services down $139.74 PMPM Total cost savings: $5,700+ per patient per year Essentially offsetting the full cost of the program (That doesn't include savings from fewer crises, better medication management, or avoided ER visits/hospitalizations) It worked because: Care was proactive, not reactive Families had guidance, not guesswork Data was used to drive, not just document So why aren’t more systems investing in this? Because they don’t: — Track ROI in the right places — Maximize reimbursement (CCM, RPM, VBID) — Tell the financial story with clinical outcomes But the ones that do unlock a model that’s sustainable, scalable, and system-saving. This is the kind of breakdown I love to share. If your program is working this way, come tell me about it on my podcast, Outcomes: Where Healthcare Strategy Meets Social Impact. 📖 Read the full study: https://lnkd.in/g3NuNHxN

1. Site Project Costing Breakdown As a Quantity Surveyor (QS), your role is to accurately estimate, control, and monitor costs throughout the lifecycle of the project. The costing structure typically includes: A. Direct Costs (Construction Costs) These are the costs directly associated with the construction of the project, which can be broken down into several categories: Labor Costs: Wages for all workers (site staff, labourers, supervisors, etc.). Payments to subcontractor labour forces. Materials Costs: Costs for raw materials (concrete, steel, timber, etc.). Delivery and transportation of materials to the site. Plant and Equipment: Costs for equipment used on-site (e.g., cranes, bulldozers, scaffolding). Rental costs for plant or equipment. Subcontractor Costs: Payments made to subcontractors for their scope of work. Costs for specialized trades (e.g., electrical, plumbing, tiling, etc.). The subcontractor’s work is usually paid based on progress, often in line with a schedule of work. B. Indirect Costs (Overheads and Contingencies) These are costs not directly related to construction but necessary to run the project: Site Overheads: Temporary site facilities (offices, toilets, etc.). Security and safety measures. Site management and administration costs. Project Overheads: Insurance premiums for workers, machinery, and the site. Permits and licensing costs. Utilities (water, electricity, etc.). Legal and accounting fees. Contingencies: A set-aside amount for unforeseen costs or project scope changes (typically a percentage of the direct costs). Risk allowances for potential delays, material price increases, etc. Profit Margins: Your desired profit margin is typically a percentage of the total project cost. C. Total Project Cost Calculation The total cost is the sum of direct costs, indirect costs, contingencies, and the desired profit margin. For example: Total Project Cost = Direct Costs + Indirect Costs + Contingency Allowances + Profit Margin Total Project Cost=Direct Costs+Indirect Costs+Contingency Allowances+Profit Margin 2. Subcontractor Cash Flow Management In a construction project, subcontractors often provide services that are integral to the completion of the overall work. The subcontractor's cash flow is crucial to ensure that payments are made on time to avoid delays or financial strain on the project. Here’s how subcontractor cash flow fits into your cost management process: A. Key Elements of Subcontractor Cash Flow Mobilization and Initial Payments: Subcontractors may require a 10% advance before starting work. Progress payments are tied to milestone completions (e.g., 25%, 50%, 75%) and verified by the QS or project manager. Retainage (5%-10%) is held until final work is completed, inspected, and accepted, ensuring all tasks and defects are addressed. Final payment follows successful completion.

💰 Garment Costing: A Quick Overview This overview covers the essential concepts, importance, and calculation methods involved in determining the cost of manufacturing a garment. It’s a fundamental process for pricing, profitability, and export decisions in the apparel industry. 🔹 Summary of Topics 💸 What is Garment Costing? Calculation of all expenses involved in producing a garment (materials, labor, logistics, operations). Goals: Retail pricing & export viability. 🤔Why is Costing Important? Ensures profitability, supports negotiation. Varies by design, fabric, and market conditions. Merchandisers track risks and cost changes. 📦Main Components of Garment Cost Fabric, trims, labor (CMT), value-added services, logistics, quality checks, and profit margin. 🧵Fabric Costing Essentials Depends on type, GSM, finish, MOQ, and Incoterms. 📐Fabric Consumption Calculated via GSM + pattern dimensions + wastage (3–8%). ✂️Trims Costing Based on unit of measurement, quality, sourcing, and handling. ⚠️Additional Cost Considerations Includes rejection, commissions, internal transport, testing, and manufacturer profit margin. 👷CMT Costing Formula-based: Uses SAM, labor cost, and efficiency to determine production labor cost. 🎨Value-Added Services Includes processes like printing and embroidery; cost varies by design complexity. Real Example: 👕 Polo T-shirt Shows a full breakdown with a total FOB cost of $4.11 per unit. 📝 Note: This is a summarized guide to key costing elements in garment manufacturing. Each section will be elaborated serially starting tomorrow, providing detailed explanations, examples, and formulas to support your understanding of apparel costing. Let me know if you'd like a cover slide or a visual version of this summary! #Merchandising #TextileIndustry #LinkedInLearning #JTanjil