How Do I Calculate Variable Costs?

- Objective today:
    - Unit economics - like individual Lego building blocks that make up the overall profitability picture
    - Revenue per unit
    - Any cost during making and selling
    - Connected to gross margin.
        - 
            - Every % is a penny of each $ available to cover overhead
- Concept:
    - What makes it improve?
        - Increase price
        - Decrease variable expense
        - Cost of product
            - produce in bulk
            - cut costs where customers don’t mind (value engineering)
        - shipping
            - negotiate better rates
            - Offer free shipping above threshold
        - advertising & commission
            - Sell to existing audience
            - Partner with other brands to sell to their customer
    - Trade-offs
        - Sometimes spending more advertising dollars or offering referral or sales commission can accelerate revenues to help cover overhead but decrease our gross margin %
- Key Question + Action
    - **What is a unit for you?**
    - **What costs do you incur with each creation and sale of every unit?**

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