1. Direct costs
Make sure the cost figure contains everything that genuinely increases when you make another sale.
2. Overheads and capacity
Gross margin must contribute towards rent, software, equipment, non-billable time and other fixed costs.
3. Target margin
Choose a margin deliberately rather than copying a markup percentage without understanding it.
4. VAT and fees
Consider VAT treatment, card fees, marketplace fees and other deductions that affect what the business retains.
5. Market reality
Compare your mathematical price with customer alternatives and the value you provide.
6. Discounts
Know your minimum acceptable price before offering promotions.
7. Review
Recalculate when major input costs, fulfilment methods or market conditions change.
ProfitMaths guides provide general educational information, not personalised accounting, tax, legal or financial advice.