Understanding direct costs is essential for turning your passion project into a profitable business, as they directly impact pricing strategies and financial health.
Direct costs, or the cost of goods sold, represent expenses directly associated with production, such as raw materials, direct labor, and production equipment.
By detailing direct costs, businesses can make informed decisions on pricing, which ultimately affects their financial strategy and success in the market.
Common direct costs include raw materials, direct labor, production equipment, energy costs, and transportation, each playing a critical role in overall financial management.
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