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How to keep costs low enough that freight charges still make your product affordable

One thing that every manufacturing company knows about is that the high cost of freight charges can actually make the final price of your product unaffordable. Basically what this means is that after you have added in all of your fixed and variable costs you are still going to need to add in your freight charges to get the final price of your product. And the way gas prices are constantly going up that means that freight charges are going to continue to increase, especially if you do your own shipping. Freight charges are actually a variable cost because of the fact that they can change depending on how many items you are shipping at one time, if you are doing your own shipping, or other factors. So in order to make sure that your final cost of your product is low enough you are going to want to look at a variety of ways to keep your variable costs down so that when you add in the high freight charges people are still going to buy your product.

Difficulty rating: Moderate to difficult

Step one:
One of the first things that you should think about doing is to see if you can reduce the price that you pay for the parts. You can approach your suppliers to see if you can get any discounts or you can check out other suppliers to see if they offer the same parts that you need for different prices.

Step two:
Another thing that you can do is to implement some kind of a manufacturing process, such as lean manufacturing or six sigma. These programs are designed to reduce the amount of waste that is created when you are manufacturing your products. What these processes will do is look at you entire manufacturing process, one step at a time and see where you can make any changes or improvements that will increase your productivity. These programs increase your productivity because they get rid of waste and poor quality, which means you are producing more quality products and you are not wasting time or energy on production costs.

Step three:
Another way that you can decrease your cost of manufacturing is to increase the amount of products that you are manufacturing; basically what you are trying to do is to increase your production. Just because you are increasing your production doesn't mean you are going to always decrease your cost of manufacturing because some companies that increase production don't pay attention to the quality of what they are manufacturing so the increase in production is pointless.

Step four:
Another thing that you need to look at as a way of decreasing the cost of your manufacturing is the quality of the final product. Many companies lose money on warranty items; this is because of faulty parts or other manufacturing issues. But by checking your quality and ensuring that you are manufacturing the highest quality products you are going to be able to reduce costs overall because not as many items will be returned due to manufacturing issues or because they are damaged.

Step five:
Finally you are going to want to look at the way you are choosing to ship your items. If you are choosing to ship them through a company like UPS or FedEx you should inquire as to business rates for shipping and discounts for bulk shipping. But if you are shipping your own items you might want to take a look at how effective the delivery truck is on its route, this might mean you need to rewrite the route so that you are saving on gas. But in general you want to see if there is anyway that you can lower your freight charges to help save on your final costs.

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