Business profitability: from production costs to marketing strategy

1 What elements to consider when carrying out a cost analysis

The basics of calculating cost price are direct costs, indirect costs, and fixed manufacturing costs. The break-even point determines your working capital requirements, but forecasts are based on the assumption of expected sales volume and selling price.

Section 1

• The basis for calculating cost price
• Break-even threshold and break-even point
• Determining cost price using forecasts
• Necessity of data compilation and adjustment
• The different costs (example: R&D costs, production costs…)
• Marketing costs

Section 2

• Pricing strategy
• The six pricing methods
• Competitive differentiation

2 Conducting a proper market study

Participants will review the key elements to consider for a solid market study, competitor analysis, and how to carry out positioning analysis. This module will briefly cover segmentation/personas and how to evaluate efforts, tools, and effectively reach target customers.

• The market and its evolution
• PESTEL
• Knowing the right method for competitor analysis
• Finding your distinctive competence
• Customer motivation and segmentation
• Potential market (volume)
• Commercialization, a continuous process
• Commercialization strategy
• Sales action plan
• From sales budget to strategy

3 How to estimate cost price

In this module, participants will briefly explore the different aspects to consider when analyzing costs and which of the three methods covered is best suited to their needs. Particular attention will be paid to conversion costs, essential for valuing finished goods, and to labor costs, a key element in human resource management.

• Cost of raw materials and supplier selection
• Distinction between billable and non-billable tasks
• Managing labor costs for maximum efficiency
• Cost price and decision-making (the right price)
• Review of the different costs
• Exercises

4 Planning and forecasting: what strategies for optimal financial management

Participants will become familiar with developing financial forecasts over 2, 3, or 5 years to gain a clear, long-term view of their business’s financial health.

They will also review the implications of profit management choices (dividends or future investments). Finally, they will cover the calculation of working capital requirements, crucial for maintaining sufficient liquidity.

Section 5

The different types of accounting:

• Financial accounting
• Cost accounting
• Taxation
• Developing financial forecasts for a long-term vision
• Managing fixed and variable costs for financial flexibility : The variable cost method, The full cost method, The activity-based costing method
• Using break-even analysis to secure profitability
• Accurate calculation of working capital requirements to support operations
• Exercises

5 How to plan cost price

In this module, participants will focus on the need to develop financial forecasts to plan pricing and profits, enabling the payment of reasonable dividends and ensuring sufficient profits for future investments. They will also see how to absorb recurring losses, including R&D investments.

• Evaluation of results
• Variance analysis
• How to adjust based on estimated and actual volumes
• Estimated profits and actual profits