What is a cost?

The cost, or cost of a company, is the money it costs a company to produce a product or offer a service, and then exploit it and try to make a profit. In this way, the cost includes all the expenses that the business activity entails.

In these expenses we find raw materials, wageof workers, labor, and the depreciation cost of the goods and machinery owned by the company. This means that, even if you already have your machines paid for, the wear and tear that occurs on them when carrying out your business activity is also a business cost.

For the purchaser of the service or product, the cost will be the final price of the product. This price will be determined by the production costs, since to this figure it will be necessary to add the profit margin that the want to perceive.

Costing is vital for a good business future. On many occasions, entrepreneurs set their prices based on the competition, but they do not calculate their costs and, therefore, they do not know if they are able to achieve the necessary profitability for the company to be viable.

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