Direct vs. Indirect Costs: The Key to Growing Your Profit

Financial Snickens

If you want to increase your profitability, you must know your numbers, especially the expenses of your direct and indirect costs.

In this episode, I break down the difference between direct and indirect costs, and how to know if you’re charging enough so you can cover your business expenses while still earning a profit!

In this episode, you’ll also hear:

• Understanding direct costs and cost of goods sold
• Calculating your gross profit margin
• How knowing direct vs. indirect costs increases profitability

Must-listen moments:

[00:00:43] Direct expenses are expenses that are directly related to the sale of your product or service.

[00:02:46] Indirect expenses…they are things that cost to run your business, but they're not directly related to the item that you sell.

[00:05:44] Knowing the difference between those two [direct and indirect costs] is incredibly important because it'll keep you profitable. If you're charging enough for your product, and able to pay for your direct costs, and cover your indirect costs, and have money left over—that’s really good!

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