Price for profit, not applause
Revenue is vanity. Contribution is survival.
The pain this fixes
You are busy, the revenue looks okay, and there is never money left. Or you are afraid to charge enough because someone might say no.
What you leave with
A price built on unit economics, a break-even number, a customer acquisition ceiling and a cash plan.
The five numbers that decide whether this works
A sale is not profit. Profit is what remains after the cost of delivering the thing, the cost of getting the customer, the tools, the fees and the tax you will owe. If you do not know these numbers, you are guessing with your rent money.
- Price: what the buyer pays, before fees and tax.
- Variable cost: what it costs you for each extra sale (materials, shipping, platform fee, contractor).
- Contribution: price minus variable cost. This is the money available to pay fixed costs and you.
- Fixed costs: tools, rent, subscriptions, insurance — the bills that arrive even with zero sales.
- Break-even units: fixed costs ÷ contribution per sale.
Illustrative unit economics
Price $100. Variable cost $30. Contribution $70. Fixed costs $2,000 a month. Break-even = 2,000 ÷ 70 = about 29 sales a month before you earn anything.
If you acquire a customer for $40, the first sale contributes $30 after acquisition. You need repeat purchases or a higher price for the model to work. This is why “we’ll make it up on volume” is usually a warning sign.
Price the outcome, not your hours
Hourly pricing punishes speed and rewards inefficiency. Value pricing ties the price to the result: money saved, revenue gained, risk removed or time returned. If you cannot measure the result yet, use a fixed scope and a day rate as a bridge.
- Cost-plus: cost + target margin. Safe, but ignores what the buyer gains.
- Market rate: what comparable providers charge. Useful anchor, not a strategy.
- Value-based: a share of the measurable value. Requires proof and clear boundaries.
- Productised: fixed scope, fixed price, fixed timeline. Best for repeatable services.
- Anchoring: show the cost of the problem, then the price of the fix.
Build a cash plan
Profit on paper does not pay bills. Cash arrives later than the sale and leaves earlier than the invoice. Plan deposits, supplier payments, ad spend and tax before you celebrate revenue.
- Take a deposit before starting custom work.
- Set payment terms and a late-payment consequence you will enforce.
- Keep a tax reserve in a separate account; ask a local accountant for the correct percentage.
- Track the gap between paying for inventory or ads and getting paid.
- Keep a buffer for refunds, chargebacks and platform holds.
Know your acquisition ceiling
If you pay more to acquire a customer than the contribution they produce, growth makes the hole bigger. Calculate the maximum you can spend before you turn on ads or hire a salesperson.
- Maximum CAC (first purchase) = contribution per sale × the share you are willing to reinvest.
- Break-even ROAS = 1 ÷ gross margin percentage.
- Payback period = CAC ÷ monthly contribution per customer.
- LTV is a forecast, not a fact; use conservative repeat rates.
- Raise price or reduce delivery cost before increasing ad spend.
Use these words
Price conversation
The problem is costing you about [cost] a month. The project is [price], and it includes [scope]. If we hit [specific result], the payback is [time]. I’m not asking you to decide today; I’m asking whether the outcome is worth [price] if we can deliver it.
Handling “too expensive”
I understand. Expensive compared with what? If the alternative is doing nothing, the cost is [cost of problem]. If it is another provider, what are they including that I am not? I can reduce the scope or move to a smaller first step, but I won’t pretend the full outcome costs less than it does.
Checklist
- Price, variable cost and contribution per sale written down.
- Fixed monthly costs and break-even units calculated.
- CAC and payback period estimated conservatively.
- Deposit and payment terms in writing.
- Tax reserve and refund buffer separated from spending money.
Mistakes that cost money
- Counting revenue as profit.
- Forgetting platform fees, shipping, refunds and tax.
- Pricing below the market to “get started” and attracting buyers who will not pay later.
- Ignoring the owner’s time as a cost.
- Scaling ads before contribution margin works.
Numbers to watch
Gross margin
(price − variable cost) ÷ price × 100
Break-even units
fixed costs ÷ contribution per unit
Break-even ROAS
1 ÷ gross margin percentage
Payback period
CAC ÷ monthly contribution per customer
Your deliverable
A one-page unit-economics sheet and a price you can defend with numbers.
Next stage
Build a website that makes strangers trust you