Many businesses assume that because a product is digital — an app, software, online platform, or digital course — it has little or no cost.
In reality, digital products often carry significant hidden and shared costs that, if not properly understood, lead to poor pricing, shrinking margins, and unprofitable growth.
This is where Digital Product Costing becomes essential.
Why Digital Product Costing Matters
Digital products are different from physical products:
- High upfront development costs
- Low marginal cost per additional user
- Shared infrastructure such as hosting, licences, support, and marketing
- Subscription and scalability challenges
Without proper costing, businesses often:
- Underprice their products
- Overestimate profitability
- Scale losses instead of profits
What Finance Professionals and Product Owners Must Understand
Accurate digital product costing helps you:
- Identify true product costs, not just visible expenses
- Allocate shared and indirect costs correctly
- Understand fixed vs variable cost behaviour
- Calculate contribution margins and break-even points
- Make informed pricing, budgeting, and scaling decisions
For finance professionals, this means better decision support.
For entrepreneurs and product teams, it means building digital products that actually make money.
Please watch out for APS’s upcoming Digital Product Costing Course later this year. This is a practical, hands-on two-day programme specifically designed to address the above-mentioned challenges.
Visit our website for more information: www.alertsprofessionalservices.co.za or contact us by email: Gervasem@alertsprofessionalservices.co.za; WhatsApp: +27 72 490 8099
