#pricing-strategies
Develop effective pricing strategies for profitability
Sales mix is your products' sales share — a tilt toward low-margin items cuts profit while revenue holds still. Track your weighted-average margin monthly.
Annual SaaS billing cuts churn far below monthly rates and pulls a year of cash forward — but prepayments are deferred revenue, not day-one income.
Gross margin tests pricing, operating margin tests overhead, net margin tests financing and tax — read the three as a funnel to find where profit leaks.
COGS is the direct cost of what you sold — materials, labor, freight. Revenue minus COGS is gross profit, the verdict on whether your pricing works.
Divide fixed costs by contribution margin per billable hour to get your break-even — then test it against realistic 65–70% utilization before you quote.
Gross margin tests your pricing; net margin tests the whole business — the gap between them shows whether pricing or overhead eats your profit.
Fixed-price puts overrun risk on you; cost-plus puts it on the client. Price either from burdened labor, add overhead recovery, and track each job weekly.
Contribution margin per unit is revenue minus variable cost — slice it by product, channel, and customer to see which slices earn their keep.
Break-even units equal fixed costs divided by contribution margin — run it in units and dollars, then guard it with a margin of safety.
Your billable rate must cover income, overhead, and the 15.3% IRS self-employment tax across only the hours you invoice — then add margin.
Target cost equals market price minus required profit — set the price first, then engineer costs down to fit before you launch.
Customer profit equals net revenue minus direct costs minus cost to serve — rank every account, reprice the tail, and release what will not pay.
