- Copying competitors’ prices ignores your own costs.
- Know the full cost and true margin of every product.
- Promote high-margin products and fix or drop the rest.
Ask an owner how they set their prices and the most common answer is: “we looked at the market”. Copying competitors feels safe, but it ignores your own costs. Some products end up carrying the business while others quietly lose money on every sale.
The signs of a pricing problem
- Sales are growing, but profit is not.
- You are busy all the time and still short of cash.
- You have not reviewed your prices since costs went up.
- Discounts are given without anyone checking the margin.
A practical way to find your true margin
For each main product or service, add up the direct cost: materials, the time your team spends on it, packaging and delivery. Then share your fixed costs, such as rent and salaries, fairly across what you sell. The difference between this full cost and your price is your real margin.
Margin worksheet for one product
| Line | What to include |
|---|---|
| Selling price | Average price after discounts |
| Direct cost | Materials, packaging, delivery |
| Labour | Team time spent on this product |
| Share of fixed costs | Rent, salaries and systems, shared fairly |
| True margin | Price minus all of the above |
What to do with the results
Products with a healthy margin deserve more marketing. Products with a thin margin need a new price, a lower cost or a smarter bundle. And products that lose money need a decision.
Every price you set is a decision about your profit. Make it with numbers.
Pricing and margin analysis is one of the most common quick wins in our consulting work, and the results are measured in money, not slides.
A workshop priced every job at the same hourly rate. When the team calculated the full cost per job type, they found that small urgent jobs lost money while large planned projects were very profitable. They introduced a minimum charge for urgent work and focused marketing on larger projects.
Questions owners ask
Will customers leave if I raise prices?
Some may, but the right customers stay when the value is clear. Raising prices on the right products often increases profit.
How often should I review prices?
At least once a year, and whenever your main costs change.
Find the margin on everything you sell.
One hour with a senior consultant, and a clear view of where your profit is made and lost.
Free · no obligation · reply within one working day
