Actually, that is what I learned over 20 years ago at the university while studying electrical engineering. Basic business class (and law) was part of the courses to get the diploma.
The general rule of thumb was, that a product in parts and production shall not be more 30% of the final price of the product. If its more, it will be a money looser. With that 30% you have 30% for marketing and distribution, and 30% for research and development. Then there you have about 10% of overhead costs for all over. Then you can play with the numbers. If, like in consumer products, marketing and distribution goes up, you have obviously less either for R&D, which means less innovation or less innovative products, or less for production, which means less quality.
That's what I learned for electronic products. Other industries maybe a little bit different. I think of these sometimes when I see a plastic box in the store for 10 bucks or so, and I know this plastics costs only a few cents in production in injection molding, of course not counting what the machine for the manufacturer had cost, what the production form cost and that it can only be used for a few 100 000 items before wearing out and so on.
The general rule of thumb was, that a product in parts and production shall not be more 30% of the final price of the product. If its more, it will be a money looser. With that 30% you have 30% for marketing and distribution, and 30% for research and development. Then there you have about 10% of overhead costs for all over. Then you can play with the numbers. If, like in consumer products, marketing and distribution goes up, you have obviously less either for R&D, which means less innovation or less innovative products, or less for production, which means less quality.
That's what I learned for electronic products. Other industries maybe a little bit different. I think of these sometimes when I see a plastic box in the store for 10 bucks or so, and I know this plastics costs only a few cents in production in injection molding, of course not counting what the machine for the manufacturer had cost, what the production form cost and that it can only be used for a few 100 000 items before wearing out and so on.