Map the production process before counting units
The model supports units per batch, setup and changeover minutes per batch, active production minutes per batch, finishing and packing per unit, and additional labor per unit. Production efficiency reduces the time treated as usable. Only complete batches fit into capacity, and scrap or rework reduces gross units to saleable units.
Unattended drying, curing, cooling, or machine time is excluded unless it prevents the owner from doing other work. That limitation matters for processes where calendar time and owner-active time differ.
Planned sales determine the earnings scenario
Planned weekly business earnings subtract per-unit materials, packaging, other variable cost, supported selling fees, fixed payment charges per forecast order, and weekly fixed business cost from gross revenue. True owner earnings divide those business earnings by the production time needed for planned units plus entered nonproduction hours.
A full-capacity comparison repeats the economics as if every saleable unit sold. It is a comparison, not a prediction. The gap between the two scenarios shows what unused capacity could mean only if demand also changes.
Worked example
A maker with more capacity than expected weekly demand
This fictional example uses illustrative assumptions. It is not a recommendation or an industry benchmark.
Assumptions
- 10 weekly business hours, including 2 nonproduction hours
- Ten units per batch and 60 active minutes per batch
- 100% illustrative efficiency with no scrap or rework
- 80 saleable units of capacity and 50% expected sell-through
- $20 selling price, $8 materials per unit, and $20 weekly fixed cost
- No selling fees in this simplified channel-neutral example
Calculation and result
- Saleable weekly capacity80 units
- Planned units sold40 units
- Unused saleable capacity40 units
- Planned gross revenue$800.00
- Planned weekly earnings$460.00
- Planned owner time6.00 hours
- Planned true hourly earnings$76.67/hr
- Full-capacity earnings comparison$940.00
The process can make 80 saleable units, but planned demand is only 40. Making the unused 40 units would create inventory, not another $480 of weekly earnings, unless those units also sell. At full sell-through, the comparison is $940 across 10 owner hours, or $94.00 per hour.
Use constraints in the right order
- Confirm the batch and per-unit time assumptions.
- Account for recurring nonproduction business time.
- Reduce gross output for efficiency and expected scrap.
- Apply a realistic sell-through assumption rather than treating capacity as sales.
- Evaluate price, cost, fees, and weekly fixed costs at planned sales.
If the process is the constraint, changing batch size, setup, active time, finishing, or efficiency can change capacity. If demand is the constraint, producing faster does not by itself increase earnings.