Practical business guide
Price one clear offer, check what every sale contributes, and test whether customers will buy it.
A written offer, a tested starting price, a break-even sales target, and a review date.
Write the deliverable, quantity, delivery time, included support, and anything that costs extra. For a service, name the limits on revisions or hours. A price is difficult to evaluate when every sale promises a different amount of work.
For one sale, include materials, delivery labor, packaging, payment fees, and other costs that rise with volume. Value your own delivery time too. Separately list monthly costs such as rent, software, insurance, and administration. Put each expense in one place to avoid double counting.
Contribution per sale = price minus variable cost per sale. Break-even units = monthly fixed costs divided by contribution per sale, rounded up to a whole sale. If contribution is zero or negative, extra sales cannot cover fixed costs. Compare the result with realistic demand and delivery capacity. This simple model assumes one offer and stable costs; a mixed product business needs a sales-mix calculation.
Record three alternatives, their prices, and differences in scope, quality, convenience, and support. Ask potential buyers what they use now and what is missing. A competitor price is useful context; it does not tell you whether that price works with your costs.
Quote one clearly described package to a defined customer group. Set a review date and a limit on delivery commitments. Record accepted and declined quotes, reasons, actual delivery time, and contribution. If buyers decline, investigate whether the obstacle is price, trust, timing, or scope before changing the number.
Keep, raise, narrow, or redesign the offer based on what you learned. Recalculate before running a discount or absorbing a cost increase. A full calendar with little money left may call for a different scope or price. Review whenever costs or market conditions change.
See the method
Hypothetical example in USD; prices are not market benchmarks.
A business tests a $150 package. Each visit costs $60: $40 of delivery labor, $10 of supplies, and $10 of travel and transaction costs. Monthly overhead is $1,800. The team can deliver at most 32 packages a month.
| Measure | At $150 | At $135 (10% discount) |
|---|---|---|
| Price | $150 | $135 |
| Variable cost per package | $60 | $60 |
| Contribution per package | $90 | $75 |
| Break-even packages | 20 | 24 |
| Revenue at 30 packages | $4,500 | $4,050 |
| Variable costs at 30 packages | $1,800 | $1,800 |
| Contribution after $1,800 overhead at 30 packages | $900 | $450 |
A 10% price cut halves the amount left after the modeled costs at 30 packages. To recover the original $900, the discounted offer needs 36 packages: ($1,800 + $900) / $75. That exceeds the 32-package capacity. Before discounting, change the scope, costs, or objective.
What this example leaves out: This simplified model includes delivery labor and overhead. It excludes income taxes, debt payments, and recovery of startup investment. Add your actual obligations to a separate cash forecast.
Calculate with your own numbers →Work on your business
Notes stay in this page until you download them or choose to take them into planning. Do not include customer, account, or confidential details.
Done when: You can explain the offer, show a positive contribution, compare break-even with capacity and likely demand, and name the next price test. A worksheet alone does not validate customer demand.
These sources support the methods and factual notes. Examples and suggested tests are Business.How teaching scenarios. Australian government resources are used for general operating methods; local tax and legal rules vary.
Cost categories and the single-offer break-even formula.
How costs, customer value, competitor comparisons, and price tests fit together.
Margin calculations and reviewing price, sales, and cost drivers.
Making the scope, price, timing, and terms of an offer clear.