Component Cost Structure

How a Component Cost Is Calculated

A component's unit cost is the sum of three elements:

• Materials cost — each material's unit price multiplied by the quantity specified in the component.
• Labour cost — each labour entry's hourly rate multiplied by the time entered (converted from minutes to hours).
• Machine cost — each machine's cost per hour multiplied by the run time entered.

There is no overhead inside a component. Overhead is only applied at the product level.

How the Component Cost Rolls Up into a Product

When you add a component to a product with a given quantity, the product cost breakdown includes:

Component unit cost × quantity = component cost contribution

That figure appears as a single line in the product's cost breakdown. Expanding the line shows the internal breakdown (materials, labour, machines inside the component).

Overhead Is Not in Components

Components are intentionally overhead-free. Overhead (workshop rent, insurance, packaging, payment processing fees, etc.) is only relevant at the product level because it depends on factors the component does not know about, such as how many units you produce in a run, which sales channel you use, and your target margin.

If you find yourself wanting to include a fixed overhead in a component, consider whether that cost should instead be a material (if it is a direct cost per unit, such as a product box) or whether it belongs in the product's overhead section.

Cascading Price Updates

CrafterBy links material prices through the chain. When you change a material's unit price:

1. Every component that uses that material gets a new calculated cost.
2. Every product that includes those components gets an updated cost breakdown.

You do not need to manually update components or products. The recalculation happens automatically when you next view or save the affected records.

Labour Rate Changes

If you change a labour rate (for example, you revise your hourly bench-work rate), components that include that labour type also recalculate, and the change flows through to products in the same way.

Components vs. Direct Materials in a Product

Both approaches (component line vs. direct material lines) produce the same total cost, assuming the same inputs. Components are preferred when:

• The same combination is reused across multiple products.
• You want a named, auditable sub-assembly in your cost breakdown.
• The sub-assembly might change independently of the products using it.

Direct material lines are fine for one-off or product-specific costs that will not be reused.