Production costs are the expenditures required to create, deliver, and support what an organization considers its product. Start by calculating the department’s burn rate—the monthly and yearly cost if nothing changes—then organize spending into categories that the business recognizes. section 2.2.1
Track costs in a simple spreadsheet, recording each license, service, and recurring commitment.
- Development: staff costs, software tools, runtime licenses, development and testing infrastructure, vendors, and training. section 2.2.1
- Production and support: use the categories that best match the organization’s product lines and business language. section 2.2.1
- Use 120%–130% of salary for staff-cost planning to include benefits, equipment, furniture, and other overhead. section 2.2.1
Turning salaries into project costs
A developer earning $100K with 20% overhead costs about $120K annually, or $500 per working day. A project requiring 14 days therefore budgets 14 × $500. section 2.2.1
Use the expenditure-bucket figure to structure a department’s cost inventory. section 2.2.1
Table 2.1 Example monthly breakdown (view table figure)
Use the monthly breakdown to compare infrastructure, staffing, software, and support costs. section 2.2.1
