Cost to run a beverage company begins with your managers. Yes, you heard it right, “Managers”. Good managers must not only be able to understand the conceptual underpinnings of cost behavior, but they must also be able to apply those concepts to real world data that do not always behave in the expected manner. Many costs contain both variable and fixed components. These costs are called mixed or semi variable. With a mixed cost, there is some fixed amount plus a variable component tied to an activity. Many costs contain both variable and fixed components. These costs are called mixed or semi variable. With a mixed cost, there is some fixed amount plus a variable component tied to an activity. The cost difference is divided by the activity difference to determine the variable cost for each additional unit of activity. The fixed cost can be calculated by subtracting variable cost from total cost. Your cheapest bottle will likely cost more than $0.25 , your bottle cap will be around $0.05, your ingredients is hard to calculate, but will probably cost over $0.30 per bottle, bottling will likely cost over $1.25 a piece for a small run, labels will cost a couples cents depending on size, material, etc. Depending where your bottler is located, shipping a pallet can cost anywhere from $150-500+/-. Probably $1,000 to ship from the bottler. 40-60% of the retail cost of your product will be going into the pocket of the shop selling your bottle. So, you are looking at around $4,000+ to develop the product and $10,000+ to produce 5,000 bottles.
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