If you are a startup or small company, it's common wisdom to not compete on price. If price is all that differentiates products in the same category, then customers will buy from the lowest-priced competitor. This means that competitors will constantly be pricing their products lower and lower to win business to where eventually, no [...]
I work predominantly with small consumer companies, especially startups and a commonality I see among them is that their COGS is really high, and how COGS impacts a CPG company selling to retail is significant. COGS includes raw materials, manufacturing, assembly and freight. This "Landed Cost" is the total cost of making the product [...]
This article talks about how to separate investment costs from your operating costs in the profit and loss statement so that you have good numbers from which to make meaningful analysis. P&L Cost Buckets In my P&L, I like to group operating costs into the following buckets: COGS, marketing, and operations. There are many expense line [...]
This post demonstrates how to use margins and benchmarks in financial statements for a CPG or consumer product business. Margins Defined By margins, I mean an expense line item that is relative to net profit, expressed in percentage. Figure 1 is a basic example with the key margins to which we will pay attention. Figure [...]
