Price your first offer without ignoring your own time
Build a simple contribution calculation, test a clear scope and learn whether a paying customer can support a viable delivery process.
On this page
Define the unit you are selling
A kit, a sourcing brief and a monthly service are different units. Write down what the buyer receives, the delivery conditions, what is excluded and how revisions or replacements work. A price without a defined scope is hard to evaluate.
For services, specify how much customization is included. For products, include the packaging and delivery arrangement. For recurring offers, explain how a customer changes quantities, pauses or cancels.
Separate delivery costs from ongoing business costs
List the costs that change when you deliver another unit: materials, shipping, transaction fees, paid labor and predictable support. Then list expenses that continue regardless of sales, such as software, insurance or rent. Some costs change in steps as capacity grows; record that instead of forcing everything into a simple category.
Estimate your own work at an hourly rate you are willing to earn. A service can appear profitable when the spreadsheet treats evenings, customer calls and revisions as free. Use observed time from pilots as soon as it is available.
Use a small example to check the arithmetic
Illustrative example only: a service sells for $150. Direct expenses are $20, and delivery takes two hours valued at $35 per hour. Contribution after that labor allowance is $60: $150 minus $20 minus $70. This is not a recommended market price or a forecast.
If monthly fixed costs in this example are $300, five identical completed jobs cover those costs at a $60 contribution. That calculation excludes items you have not listed, including taxes, financing and unexpected rework. A contribution at or below zero cannot cover fixed costs by selling more of the same unit.
Test the offer at a stated price
Show a buyer a concrete deliverable and ask for a purchase decision. Questions about willingness to pay can help with discovery, but they do not replace a transaction. Record objections in the words the buyer uses.
Avoid changing price and scope after every conversation. A short, consistent test is easier to interpret. If you discount a pilot, show the intended ongoing price and the end of the discount before the buyer commits.
Review the exceptions before expanding
Compare quoted and actual costs for each delivery. Identify extra revisions, emergency shipping, payment delays and time spent chasing missing information. Decide whether the answer is a higher price, a tighter scope or a simpler offer.
Keep a cash-timing view as well as a margin view. A profitable order can still create a problem if the supplier needs payment long before the customer pays. Build the next test around a payment schedule the business can actually support.
References and further reading
These sources provide planning and operating guidance. They do not establish demand for this particular concept.
- SBA: Plan your businessMarket research, business planning and startup cost worksheets.