What costs should I include in my cost per pound?
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Everything it takes to keep the lights on and the plants growing. That means rent, electric, water, labor (including your own salary), nutrients, pest management, CO2, equipment depreciation, license fees, compliance software, lab testing, insurance, loan payments, and often-missed costs like waste disposal and packaging. If you're paying for it because you have a grow, it should be in there. Our worksheet includes 25+ line items to make sure nothing gets missed.
How do you calculate harvests per year?
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Harvests per year = (Number of flower zones ร 365) รท Cycle length in days. For example, if you have 4 rooms and run 63-day cycles, you get 4 ร 365 รท 63 = 23.2 harvests per year. This assumes rooms are staggered and running continuously, which is standard for commercial operations.
What's a competitive cost per pound for commercial cultivation?
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It varies enormously by market. In mature markets like Michigan and Oregon, operators at $300-400/lb can survive. At $500-600/lb, you're vulnerable to wholesale price compression. Above $600/lb, the math gets very difficult unless you're selling at premium retail. The operators who thrive long-term are the ones systematically lowering this number by improving yields, reducing waste, and increasing consistency run over run.
Why is yield the biggest lever on cost per pound?
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Because your fixed costs (rent, labor, depreciation, licenses) stay the same whether you pull 20 lbs or 30 lbs from a room. If your annual overhead is $500,000 and you harvest 23 times at 25 lbs, your cost per pound is about $870. But if you can push that to 30 lbs per harvest with no additional expense, your cost per pound drops to about $725. That's $145/lb of pure margin on every pound you produce. Yield is the denominator in the equation, and small improvements compound across every harvest.
How does tax rate affect my cost per pound?
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Tax doesn't change your cost to produce, but it changes the price you need to charge to cover that cost. In Michigan, the 24% wholesale excise tax means you need to sell at a higher OTD (out-the-door) price to net the same take-home. For example, if you need $350/lb to break even, you'd need to charge $350 รท 0.76 = $461/lb OTD to cover the tax. That's why the "Minimum OTD Price" metric matters โ it tells you the real floor.