Tool 02 · Commercial planning

A profitable price starts with the costs.

Work through one job or unit. Compare the proposed price, a discount and the price needed for your target margin.

Use a consistent VAT basis. Enter selling price excluding VAT. Exclude purchase VAT you can reclaim, but include any VAT you cannot reclaim. This is not a customer invoice, a VAT calculation or a company profit forecast.

1 / Cost this job or unit

Materials or goods (£)Costs needed for this job or unit.

Working hoursHours spent delivering this job.

Cost per working hour (£)Use a realistic cost or owner-time allowance, not your selling rate.

Other direct costs (£)Subcontractors, job travel, fees or similar. Do not count time twice.

Overhead allocated to this job (£)A sensible share of rent, software and other running costs.

2 / Test your price

Proposed selling price excluding VAT (£)All figures must relate to the same job or unit.

Discount to test (%)A 10% price discount does not necessarily mean 10% less contribution.

Target margin (%)Margin is contribution divided by sales, not cost. Must be below 100%.

No tax relief is assumed. This is a scenario, not a recommendation that customers will accept the price.

Your result will appear here.

Enter your own figures, or load the completed example. Nothing is sent to SBX.

Understanding margin, mark-up and the result

Contribution here means price minus the costs entered, including your allocated overhead. It is before tax and before any costs you have not included. Margin divides that contribution by selling price; mark-up divides it by cost.

For £700 of costs and a £1,000 price, contribution is £300 and margin is 30%. A 10% price discount leaves a £900 price and £200 contribution, assuming those costs do not change.

The suggested price is rounded up to a whole penny to meet the target on the entered costs. The tool does not calculate payroll on-costs, bad-debt risk, finance cost, VAT or your whole-business profit.