How Do You Calculate The Economic Profit Of A Business?
Calculating the economic profit of a business requires knowing the expenses and asking price for products and services. Subtract costs from price and you have profit. The cost of producing an item takes into account building costs, labor, supplies and other expenses–which therefore affect how you calculate profit. Write down actual expenses if you already are working. Convert numbers into a consistent variable. For example, if you spend $12,000 per year in taxes and $300 per month in office supplies, list $12,000 in taxes and $3,600 in office supplies. Estimate expenses if you are not working yet. Speak with someone in the business to tell you how much they spend on resources. Search online for the typical costs of your particular business. Try libraries and bookstores for further resources. Gather a range of bids for services and supplies to make an educated decision about how much you want to spend where. Establish priorities: You may want to save on office supplies in order to spen
