Level 3 - Commercial terms you need to know – Costs-L3B2

Video Transcription

Video Summary

The transcript explains the difference between direct and indirect costs and why they matter to business success. Direct costs are tied to a specific product, service, or activity, such as materials, labor, equipment, or sales-related expenses. Indirect costs support the business overall and cannot be assigned to one project, including HR, payroll, legal, rent, and insurance. It also notes that cost classification can vary by company and industry. For salespeople, salary, time spent on accounts, and discounts may count as direct costs. The key takeaway is to price transparently and fairly, since customers closely scrutinize costs.

Keywords

direct costs

indirect costs

cost classification

business pricing

sales expenses