70% Rule in Manufacturing: What It Means and How It Drives Profit

When you hear the 70% rule, a simple cost-control principle used by small manufacturers to ensure profitability. Also known as the 70-30 rule, it means keeping all production and operating costs below 70% of your sales revenue—leaving at least 30% as pure profit. This isn’t theory. It’s how backyard makers in Gujarat turn discarded plastic scraps into phone stands that sell for ₹200 each, while spending just ₹120 to make them. No fancy machines. No loans. Just smart math.

The 70% rule, a practical guideline for small-scale manufacturing profitability works because it forces you to focus on what matters: material cost, labor, and overhead. If your product sells for ₹100, you can’t spend more than ₹70 on everything combined. That includes the raw material, electricity, packaging, and your time. Many new makers fail because they ignore labor cost or assume "free" tools mean free production. But your time has value. If you spend three hours making ten units, that’s three hours you could’ve spent selling or improving the product. The 70% rule makes you count it.

This rule shows up everywhere in the posts below. From the maker in Tamil Nadu who uses old metal scraps to build custom brackets for local workshops, to the entrepreneur in Ludhiana who turns discarded fabric into reusable bags—each one sticks to the 70% rule to stay alive. It’s not about being the biggest. It’s about being the most efficient. The small manufacturer, a business producing goods with limited resources, often under 10 employees doesn’t compete with factories. They compete on speed, flexibility, and margins. And the 70% rule is their secret weapon. You don’t need to sell 10,000 units. You just need to make ₹30 on every ₹100 you earn.

What you’ll find in the posts below aren’t abstract ideas. They’re real examples of people using the 70% rule to build businesses from nothing. You’ll see how they cut costs without cutting corners, how they pick materials that cost less but sell for more, and how they avoid the traps that sink most new makers. Whether it’s food processing, electronics assembly, or furniture making, the rule stays the same: spend less than 70%, sell for more, and keep the rest. No magic. Just discipline.