Product Costing: Understanding the Financials of Your Product

As a product manager you don’t need to be an accounting expert—but you do need to understand your product’s financial state.

In this course, we will teach you the essential accounting and finance skills that product managers need to feel confident when making key product decisions, advocating for team resources, and communicating profits (and losses) with stakeholders. By leveraging accounting and cost management concepts, you will gain a better understanding of your product’s current financial health and be equipped to anticipate how the decisions you make today will affect your product’s financial future.

  • Build product profitability projections and establish product pricing methods
  • Evaluate data to generate the best financial outcomes
  • Navigate basic accounting concepts and jargon

Course Outline

Introduction to Financial Accounting
Discover how the fundamental principles and concepts of accounting align with product manager metrics of success. Explore three types of financial statements: the balance sheet, the income statement, and the statement of cash flows.
Recording the Transactions of Business
Learn how to record business transactions and the basic terminology of accounting records. See how the accounting cycle connects with product management goal-setting and measurement.
The Balance Sheet
Gain a comprehensive overview of the structure and components of a balance sheet, including its purpose and how it is used to measure the financial health of a business. Examine how inventory valuation methods impact a company's financial statements and ultimately its profitability.
Income Measurement and Statement of Cash Flows
Learn how the income statement (profit and loss statement or P&L) and the statement of cash flows are constructed and why they are significant in financial analysis. Examine how they are used to gain a comprehensive understanding of a company's financial performance.
Managing the Product P&L
Explore the components of product cost, including direct materials, direct labor, and manufacturing overhead. Learn about the relationship between unit costs, product margins, and product pricing. Learn why product cost structure is key when making pricing decisions.
Cost Analysis for Decision-making and Pricing
Learn how to use the Cost-Volume-Profit (CVP) analysis tool to determine the required revenue targets that a company must achieve to achieve its desired profit. Explore the relationship between product costs, short-term discounting strategies, and long-term pricing strategies.
Planning and Budgeting
Learn how budgeting and product success metrics should be used in your financial planning and analysis to achieve profitable business operations. See how to create a budgeted cost of goods sold statement and a look-ahead product profit and loss (P&L) or income statement to inform decision-making and strategic planning.

Course Page
Online, self-paced
9 hours
Product Management Program
Stanford School of Engineering