Manufacturing cost is only part of total business cost
Retail price can look excessive when only formula, bottle and carton are counted. Actual sales also carry channel fees, discounts, payment costs, logistics, returns, advertising and inventory risk.
Work backward from the channel
Set target channel and promotion first, then calculate the allowable manufacturing cost.
- List price and actual paid price
- Channel fees and promotion contribution
- Logistics, returns and CS
- Breakeven ad spend and ROAS
- First-order MOQ and sell-through period
A product that sells may not be a product that earns
Strong early response is not scalable if recurring promotions destroy margin. BLD:B sets channel P&L and the cost ceiling during product planning.