In previous articles in this series, the key concepts and structures of developing a cost model were discussed. Important ideas to review are granularity, processes, level and special process cases.

You are ready to begin building your cost model, or perhaps you are in the process of electing/upgrading your ERP software and want to plan through how it will support your cost model. 

In prior articles (December 2021 FORGE and February 2022 Industrial Heating), we discussed the reasons behind the importance of understanding margins (price minus cost) for the seller of any product or service. Your Cost Model is the framework for calculating costs.

The goal of most businesses is to make money. Doing so is simple if you sell your offerings for more than it costs you to acquire, make or provide them.