Fixed Costs for Home-Based Shops
Learn how to turn your home and shop expenses into a clear monthly “fixed cost” number you can plug directly into BuildItTV Product Pricing Studio so every product helps carry its share.
What are fixed costs and why do they matter?
Fixed costs are the bills you pay whether you sell one project this month or fifty: housing, utilities, insurance, software, and all the other must-pay expenses that keep your shop alive.
Always-on expenses
Rent or mortgage, electric, internet, phone, insurance, and similar “keep the lights on” costs are fixed. They don’t care how busy you are – they show up every month.
Spread across every product
Instead of trying to pay those bills from “whatever is left,” you allocate a slice of your fixed costs into every job so the business supports itself on purpose.
Foundation of profitable pricing
When fixed costs are missing from your pricing, your numbers can look good on paper while your bank account quietly disagrees. Getting this right is a big step toward real profit.
How to build your monthly fixed cost number
You only have to do this once, then update it as things change. The goal is a single monthly total the app can use behind the scenes.
1. List every recurring bill
- Home rent or mortgage
- Electric, gas, water, trash
- Internet and phone
- Shop rent (if separate)
- Insurance (home, tool, liability)
- Software and subscriptions
- Accounting, bank fees, advertising
2. Decide what share belongs to the business
For home-based shops, the business usually pays a percentage of household bills instead of the full amount. A few examples:
- Home office or shop uses 20% of your square footage
- Shop power tools make up 30–40% of your electric use
- Internet is used ~50% for the business
You don’t need perfect math here – a reasonable, honest estimate is enough.
3. Convert to a monthly total
Once you’ve decided how much of each bill belongs to the business, convert everything to a monthly amount:
- Monthly bills stay the same
- Yearly bills ÷ 12
- Quarterly bills ÷ 3
Add them all together – that’s your monthly fixed cost number for the shop.
Example: Home-based CNC shop
Here’s a simple example to show how a mixed home + shop setup can turn into a clear monthly fixed cost.
Imagine you run a small CNC shop out of your garage and office.
Each month, your household bills look like this:
- $1,500 home mortgage
- $220 electric
- $90 internet
- $60 phone
- $120 insurance (home + tools rider)
- $50 software subscriptions
Now decide what share belongs to the business:
- Mortgage: 20% used for office + shop → $300
- Electric: 40% due to machines, dust collection, lighting → $88
- Internet: 50% work, 50% personal → $45
- Phone: 50% work, 50% personal → $30
- Insurance: 60% business related → $72
- Software: 100% business → $50
Add those business portions together:
$300 + $88 + $45 + $30 + $72 + $50 = $585/month
In this example, your shop needs to bring in at least $585 every month just to keep the doors open – before materials, labor, or profit. That’s the number Product Pricing Studio uses when it spreads fixed costs across your products.
How fixed costs flow into your product pricing
Once you have your monthly fixed cost number, BuildItTV Product Pricing Studio uses it behind the scenes so each product carries a fair share of the overhead.
1. Enter fixed costs once
On the Fixed Costs screen, you’ll enter your monthly numbers by category: housing, utilities, insurance, software, and so on. You can also add custom “other” categories for your shop.
2. App calculates hourly overhead
The app uses your estimated working hours per month to convert that monthly total into an hourly overhead amount. That allows it to blend fixed costs into your machine rates and labor.
3. Pricing pulls from the same source
When you price a product, the fixed cost portion is already baked into the calculations. You don’t see a separate “overhead line,” but it’s there, quietly protecting your margins.
Common mistakes with fixed costs
Ignoring small bills
“Little” costs like software, PO boxes, and cloud storage add up fast. Leaving them out makes your fixed cost number look nicer than reality.
Using 0% or 100% on shared bills
For household expenses, 0% or 100% is rarely accurate. Choosing a reasonable middle-ground percentage usually reflects reality better.
Never revisiting the numbers
Rent increases, insurance changes, and new tools all move the target. Reviewing your fixed costs once or twice a year keeps your pricing honest.
Put your fixed costs to work in Product Pricing Studio
Take 20–30 minutes to build your fixed cost list once. After that, every product you price in the app will quietly pull its share of those expenses.