The maker's costing glossary
Plain-English definitions of the pricing terms that decide whether your craft makes money.
Bill of Materials (BOM)
The itemized list of everything that goes into a product.
Break-even
The point where revenue finally covers all your costs.
COGS (Cost of Goods Sold)
The direct cost to make the products you actually sold.
Contribution Margin
What each sale contributes toward fixed costs and profit.
Fixed vs Variable Cost
Costs that stay put vs costs that scale with what you make.
Gross Margin
The share of the sale price left after COGS.
Keystone Pricing
The classic 'double the cost' rule of thumb.
Labor Rate
What an hour of your making time is actually worth — and the number most makers set too low.
Landed Cost
The true cost of a material once it reaches your bench.
Margin vs Markup
The single most common — and most expensive — pricing mistake makers make.
Markup
How much you add on top of cost to set the price.
Overhead
The indirect costs of running your business, not tied to any one item.
Unit Cost
The all-in cost to make one finished item.
Wholesale vs Retail
Two prices for two kinds of buyer — and both must still profit.