Pricing and profit: cost the work, then test the price
Before changing a price, work out what the sale needs to pay for. These guides follow a shipment, a recipe, a job or an order through its costs, then help you test what would be left.
Start with the foundation guide in each section. The worked examples use fictional Australian-dollar amounts, with the GST assumptions beside the table. Replace them with your own figures and keep contribution separate from the business's final profit.
Cost a product
Start with pricing fundamentals, then follow stock, usable yield and sales-channel costs through a worked example.
Pricing Strategy for Small Business: Cost-Plus vs Value Pricing
Cost-plus vs value pricing for Australian small businesses: work out your true hourly cost, set margins that stick, and know when to raise your prices.
10 min readLanded Product Cost: Work Out the Cost per Saleable Unit
Calculate landed product cost with freight, handling and saleable units. Compare shipments, allocate shared costs and keep recoverable GST separate.
4 min readCost of Goods Sold (COGS): Reconcile Stock and Purchases
Work through a cost-of-goods-sold reconciliation with opening stock, purchases and closing stock, plus a separate record for returns and stock differences.
4 min readRecipe Cost per Portion: Allow for Yield, Waste and Portion Size
Trace ingredients from purchased weight to saleable portions. Use a recipe-cost worksheet for trim loss, cooking yield, garnish, packaging and portion drift.
4 min readWholesale Pricing: What Remains After the Retailer Margin?
Work backwards from a retail price to test wholesale contribution. Compare direct sales, retailer margin, freight and returns on the same GST basis.
3 min readMarketplace Profit per Order: Include Fees, Returns and Fulfilment
Reconstruct marketplace profit per order from the sale and settlement. Check fee bases, shipping, fulfilment and return losses with a worked comparison.
3 min read
Cost a job
Establish a sustainable hourly rate, check actual delivery and make room for travel, shared costs and uncertainty.
How to Calculate Your Hourly Rate as a Sole Trader
Set a sustainable hourly rate using income, overheads and realistic billable hours. Worked Australian example, free calculator and a quote-check checklist.
5 min readJob Profitability Review: Compare Your Quote with Actual Costs
Compare quoted and actual labour, materials, travel and rework. Use a worked job-cost review to find the estimating assumption to change next time.
3 min readAllocate Overheads to Jobs: Choose a Cost Driver That Fits
Compare labour-hour, job-count and revenue allocations for two jobs. Check overhead recovery, capacity assumptions and the effect on your next quote.
3 min readCall-Out and Travel Charges: Calculate the Cost of a Visit
Calculate travel, setup and on-site cost for a service visit. Compare a call-out component with a bundled minimum price and test more distant jobs.
3 min readRush-Job Pricing: Cost the Work You Would Have to Displace
Cost an urgent job using extra delivery costs and displaced contribution. Compare accepting, rescheduling and declining before choosing a rush price.
3 min readQuote Contingency: Cost the Uncertainty and Explain the Scope
Build a quote-risk register with cost ranges, evidence and treatments. Separate the base estimate, contingency and any proposed scope-change process.
3 min readRetainer Profitability: Measure the Work Behind the Monthly Fee
Review monthly retainer fees against delivery time, direct costs and reserved capacity. Find revision creep and compare effective rates across months.
3 min read
Test a price
Check the contribution needed to support the business, then test discounts, delivery offers and small orders.
Break-Even Analysis Explained (With a Simple Formula)
Break-even analysis in plain English: split fixed and variable costs, work out your contribution margin, and see how much you must sell to cover costs.
8 min readDiscount Campaign Cost Sheet: How Many Extra Sales Do You Need?
Calculate the extra units a discount must sell to preserve contribution. Include payment fees, fulfilment and campaign spending, then test capacity.
3 min readVolume Discounts: Set Tiers That Preserve Order Contribution
Test volume-discount tiers with real handling savings. Compare all-units and incremental pricing, and spot thresholds where a bigger order earns less.
3 min readFree Shipping Threshold: Can the Basket Pay for Delivery?
Test a free-shipping threshold across basket sizes and delivery zones. Include product margin, packing, heavy items and a target contribution per order.
3 min readMinimum Order Value: Cover the Cost of Small Orders
Calculate a minimum order value from handling cost and contribution. Compare a minimum, a small-order fee and consolidation using the same baskets.
3 min read