After meeting with Líder Jr. experts, RS Doces began to provide data that could structure the beginning of the project. Therefore, the clients weighed 35 flavors of truffles in sizes S, M and L; six flavors of cake in a jar with white dough, chocolate dough and the Belgian cream used as a base; six flavors of truffle cone; five flavors of gingerbread in sizes S and M; three flavors of alfajor and chocolate basket.
2. Starting the project
Right from the start, Líder, as always, was concerned about having 100% alignment with its clients. To this end, we scheduled several meetings so that the specialists could explain the terms required for the project. In addition, we would also jointly define the most appropriate costing method for the company's objectives, routine and aspirations. The specialists basically gave a lesson on the two types of methods – absorption and variable.
You can check the difference between the two in our article about Costing. Later, the company owners chose absorption costing, together with the experts' opinion. In addition to the pricing service, the owners gained knowledge and mastery over the subject of pricing. Our team trained them to make any changes to the spreadsheet in the future and also to be able to make decisions.
The analysis of each of the costs involved in the production process allows the correct price to be set for each product.
3. Understanding the complexity of Costing for RS Doces
Because each product has a wide variety of flavors, Líder thought it would be feasible to set a new price for each flavor of the sweets. However, after analyzing the fixed and variable costs and expenses, it was noted that there was no benefit to the company in changing the sales price. The production cost was practically the same.
Therefore, some products were discontinued. In addition to not having a considerable sales tax, the cost of some of them was the same, causing losses to RS. As an example, using fictitious values and products for the reader's understanding: the size P chicken pie had the same cost as the size G pie. Therefore, when passing on the sales value to the end customer, there would be a conflict. Since it would be the same sales value, there would be a loss or overpricing. Therefore, after meetings with the company's owners, Líder conducted a study and selected the products that would bring benefits.
The RS Doces menu was completely readapted during the Costing process.
4. Challenges Faced
The biggest challenge was meeting the company's desire to double its profits. The lack of standardization was the main obstacle to achieving this goal, since the RS Doces team did not buy from a fixed supplier. In fact, they bought from supermarkets, which frequently pass on increases resulting from political, economic and climate changes. So, even when they sold more than the standard, if there was a significant increase in raw materials, the revenue would be higher. However, unfortunately, the profit would be the same. Líder Jr. made a fully automated spreadsheet available to enable changes in raw materials so that the increased cost would reach the end customer.
Considering that the company is structured in the owners' residence, it was extremely important to correctly divide the amounts of bills to be paid for personal and professional use. Therefore, Líder conducted a detailed study to execute the Costing, taking into account production time, cleaning and products in equipment. With this, it was possible to find the percentage corresponding to the expenses and costs allocated to RS Doces. The team also calculated the time spent and consumption of electricity, internet use for advertising, gas (LPG) and all other expenses.
Following several meetings between Líder and RS Doces, it was noted that demand and revenue per period were not the same. This fact generated indirect losses and, without pricing, would have been impossible to notice.
5. Knowledge Used
As mentioned above, Líder saw the need to structure a highly automated and interconnected spreadsheet. The experts' knowledge of spreadsheets was of utmost importance for the structuring and visualization. Since Líder's two values are "Customer Focus" and "Excellence in Results", the team was very concerned about delivering a spreadsheet that reflected the customers' needs. In addition, it was highly usable within the company's knowledge and day-to-day activities.
Therefore, the team placed buttons on all tabs. Furthermore, the names were made very intuitive and the prices were highlighted, all of this to make the routine of RS Doces owners easier. It is also worth mentioning that the project team added tabs so that owners could update the prices, such as the increase in the prices passed on by supermarkets, which causes the entire pricing to change. However, the support team advised the company not to make changes that are not significant, since there will be no change in the final price.
Machinery depreciation must also be considered when pricing products.
As a food production company, machines such as stoves, refrigerators, mixers, ovens and blenders are constantly used. A very common mistake made by traders and entrepreneurs is, when pricing their products, not taking into account the depreciation of the machinery and even the utensils used in manufacturing. To learn more about this subject, visit https://otimogestor.com.br/blog/depreci ... lar-agora/ . Knowing this, Líder made a list of all the machinery that RS uses to produce its sweets. After that, the Líder Jr. team quoted the values, calculated the depreciation index, the annual and monthly payments. This value is added to the apportionment of each product.
5. Understanding more about Costing
The apportionment corresponds to the indirect fixed costs of each candy. These are costs that are more difficult to allocate than labor, for example. The team responsible for the project chose to leave the apportionment in a separate tab. As previously mentioned, the team responsible entered the depreciation with the materials. After entering the values, the method was chosen – percentage of sales – thus, it was possible for each candy to absorb the correct value. In simple terms, the percentage that each candy has of participation in sales is subtracted from the total of each indirect fixed cost. Therefore, finding the total cost value, and then dividing this value by its respective yield, the cost obtained is added to the tab of each candy, thus having the final cost – sum of fixed and variable costs.
Another very important piece of knowledge used in the project is that related to MarkUp , a multiplier index used to determine the final sales price. Markup takes into account the profit margin, fixed expenses and sales revenue from the sweets. However, in order to increase profits without the sales prices of the products showing discrepancies with those before pricing, the demand for the products was changed, showing an increase of 27%. This allowed the sales price to be maintained at the level that RS Doces' target audience is willing to pay, while also meeting its goals of increasing profits.
