Price for Profit | Capital Status

Price for Profit

Do you actually know
what this work makes you?

Most businesses know what they charge. Far fewer know what the work costs to deliver. This works backwards from labour, delivery costs, overhead and your target margin, so you can see what the work needs to cost, and whether the business can actually deliver enough of it to reach your revenue target.

Every figure here is a commercial planning estimate, not payroll, tax, legal or accounting advice. See the disclaimer at the end.

Stage 1

What are you pricing?

Stage 2

What does this actually cost to deliver?

Before we decide what to charge, we need to know what the work costs the business, including the labour that is often forgotten.

A. Labour

B. Materials

C. Contractors / Subcontractors

D. Project-specific expenses

Contingency

An allowance for uncertainty in delivery cost. Not the same as profit.
%
Stage 3

The project also needs to help
pay for the business around it.

Direct costs tell you what this work costs to deliver. Pricing also needs to recover the infrastructure that makes delivery possible: software, rent, insurance, admin, bookkeeping, marketing, and the rest of what keeps the business running.

If a delivery person's full employment cost is already included in Stage 2, don't add that same cost into overhead again.

$
Stage 4

Now decide what
you actually want to make.

Margin vs markup

A markup is added on top of cost. A margin is the share of the final price that's profit. They are not the same number, and mixing them up is one of the most common pricing mistakes.

Quick markup ↔ margin converter
%
%

Your targets

The margin you're unwilling to go below
%
What this work needs to make to be worth doing
%
Break-even
$0
0% estimated margin
Your floor
$0
min margin
Price for profit
$0
target margin
Estimated project profit at target price
$0
Price for profit, ex GST
$0
GST
$0
Client quote, incl GST
$0

GST collected is not profit.

Stage 5

What are you charging now?

$
Reverse price calculator: I need the selling price to be...
$

What happens if they ask for a discount?

0%
Amount
Discounted price
$0
Discounted profit
$0
Discounted margin
0%
Profit dollars lost
$0
% of original profit lost
0%

What happens when the scope changes?

$
$
$
Additional true cost
$0
Required variation, ex GST
$0
GST
$0
Client variation, incl GST
$0

Scope doesn't only add cost. To preserve your margin, the variation also needs to preserve the profit built into the original pricing.

Stage 6

Can this offer actually
build the business you want?

Optional. From your Dream Life Calculator result, if you've used it
$

Delivery capacity

hrs / mo
Advanced: check capacity by role, not just total hours

For each person from Stage 2, how many productive hours do they realistically have available for this kind of work each month?

Results

Your Price for Profit

Price for profit, ex GST
$0
GST: $0Client quote, incl GST: $0
What sits underneath the price
Labour
$0
Materials
$0
Contractors
$0
Direct expenses
$0
Contingency
$0
Overhead
$0
True cost
$0
Estimated project profit
$0
Target margin
0%
What are your numbers telling you?
Immediate commercial lever

The money journey

This calculator is an educational business-planning tool only and does not constitute financial, tax, payroll, employment, legal or accounting advice. Labour on-costs, superannuation obligations, GST treatment, workers compensation, payroll tax, awards, leave entitlements and other business costs vary depending on your circumstances. Use your actual business figures where possible and confirm important pricing and financial decisions with appropriately qualified professionals.
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