How a Manufacturing &amp šŸ­; Wholesale Business Can Use SmartPredictAI

How a Manufacturing &amp šŸ­; Wholesale Business Can Use SmartPredictAI

How a Manufacturing & Wholesale Business Can Use SmartPredictAI

Ā 

1. Manufacturing & Wholesale šŸ­

Use Case:
Manufacturers and wholesalers need to determine bulk pricing strategies while ensuring a consistent profit margin across different order sizes.

Example:
A furniture manufacturer, "Crafted Elegance," produces wooden tables and aims to calculate the optimal selling price per unit based on material, labor, and transportation costs.

Cost Breakdown for 2025:

  • Raw Material Costs:
    • Wood: Due to stable market conditions, the cost of high-quality hardwood is approximately $600 per cubic meter. Each table requires 0.1 cubic meters, totaling $60 per table.
  • Labor Costs:
    • Skilled Labor: The average wage for skilled craftsmen is $25 per hour. Each table takes 3 hours to produce, resulting in $75 per table.
  • Transportation Costs:
    • Shipping: With fuel prices stabilizing, the average shipping cost per table is $20.
  • Overhead Costs:
    • Utilities, Maintenance, and Rent: Allocated at $30 per table.

Total Cost per Table:
$60 (Materials) + $75 (Labor) + $20 (Transportation) + $30 (Overhead) = $185

Desired Profit Margin:
To remain competitive and profitable, the company targets a 40% profit margin.

Selling Price Calculation:
Selling Price = Total Cost per Table Ɨ (1 + Desired Profit Margin)

Selling Price = $185 Ɨ (1 + 0.40) = $185 Ɨ 1.40 = $259

Outcome:
By pricing each wooden table at $259, "Crafted Elegance" ensures a 40% profit margin, covering all costs and achieving profitability.

Ā 

Back to blog