Cultivating Income & Expenses Pt. 2

By Christina Suter on May 12, 2018 at 09:15 AM in Business Issues
Cultivating Income & Expenses Pt. 2

On last week's blog post I talked about cultivating expenses and in today's post I'll be talking about cultivating income. 

What's your direct cost per item? Direct cost means things like- cost of good, employee or consultant wages, supplies, rent, etc. Know your margin so you know how much you can take home as your salary. The more products you produce the more margin you should get on each product. If you're making 500 widgets but you want to make 700 widgets. Increasing your production by 200 doesn't increase your overhead cost because it doesn't require you to get more office space or a bigger car or the like. But you do have to pay for more pieces of the product in order to create it. if 20% in is direct cost and 20% is in soft cost, that leaves you 60% it cover your overhead and margin. You could earn more money if you make 200 more instead of 500 more which will bump up your overhead cost.

Your margin is how much money is left over after your direct, soft, and overhead cost. So fill in these blanks: I need to make _ to get a net income of _. Those blanks can be filled in when you understand the margin on your products. That alone can take you from the red to the black in your books.

Increasing Income

My income comes from what? What makes you the most in your gross? Answer those two questions for yourself. For me, I earn more in gross as a real estate investor than a small business advisor. What makes you the most in gross income may not bring you the most net income. For me, I kept my small business clients going and increased my networking on the real estate side. I had two viable products but I fed real estate more.

What do others in my industry do? Am I doing what I can earn me the most money? Is my competition doing my product better than me? Is someone else in your industry selling their product or service as a package? Could you do the same?

New products always take time and there's always a chaos involved with rolling out something new, so give yourself 6 months for it to prove itself. By 6 months you can tell whether it's growing and is worth the time. 


You can always increase and decrease your prices. If your cost of goods goes up you need to increase your prices. If you're overpriced for your industry you need to lower your prices in order to compete. I will do a post soon on managing pricing, but in the meantime, if you figure out your overhead, soft cost, and direct cost and you realize you're not charging enough because your cost of good demand you charge more and your industry has space, you need to increase your pricing. 

Your purpose is to charge enough that you get to fulfill that purpose and do your work. If you're afraid to charge enough you're closing yourself out from being able to do your work. Your business is part o your purpose, you have the right to charge. An atom never apologizes for the space it takes up.