What to charge: prices that cover operations and leave a surplus
Photo: Avila Ops Tecnologia
A product or service’s minimum price adds four parts: direct sale costs, its share of monthly fixed costs, applicable taxes, and margin remaining for the business. If prices fail to cover the first three, you pay to work. The fourth makes it worthwhile.
Recalculate annually at minimum and whenever costs change. Early in the year, many change together: minimum wage, supplier prices, rent adjustments. Last year’s prices with this year’s costs are the quietest way to lose money.
How do you calculate in four steps?
Use a woodworking shop making a custom cabinet.
- Direct costs: materials, hardware, shipping, hired helper. Say R$ 1,800.
- Fixed cost per hour: add expenses paid without sales (rent, electricity, internet, owner compensation, accountant, tools). Divide by productive monthly hours, not all hours. R$ 9,000 fixed costs and 120 productive hours means R$ 75 hourly. The cabinet takes 20 hours: R$ 1,500.
- Tax: your regime’s percentage of selling price. Ask your accountant for the exact classification rate. Apply to final price, not cost. For MEI, tax is a fixed monthly DAS amount included in fixed costs, not here.
- Margin: what the business must retain for growth, weak months, and risk compensation. Your decision, not a calculation.
Direct plus fixed costs total R$ 3,300. Add taxes and margin. Assuming 6% tax and 20% margin, price is R$ 3,300 divided by (1 minus 0.26), about R$ 4,460. Selling for R$ 3,500 looks profitable but loses money.
Where do most people go wrong?
Two places. First, forgetting their own salary in overhead. Without owner compensation, prices “work” because you worked free. Second, dividing overhead by all monthly hours, 176 or 220, while actual production is much lower. The rest goes into quotes, travel, materials purchasing, and service. Those hours exist and someone pays: customers or you.
A smaller but frequent mistake is applying tax percentages to costs rather than prices. The difference looks small and totals a month’s profit over a year.
How do you know prices are too low?
You close almost every quote: customers do not haggle because it is already cheap. You work all month with nothing left: omitted overhead consumes margins. You refuse work because of no time but cannot afford hiring: prices create no hiring buffer.
If two appear, raise prices. See raising prices without losing customers: how to announce it. For presenting ranges, see three price tiers: why the middle sells more.
What to do now
Add last month’s overhead including your salary. Count actual productive weekly hours and multiply by four. Divide the first by the second. Hourly cost is what you need before the next quote. If operations live in spreadsheets and numbers fail to add up, we help calculate in the first conversation: avilaops.com/jornada or contact us on WhatsApp: wa.me/5517997811471.
Frequently asked questions
Should I charge competitors’ prices?
Their prices are references, not rules. They may be wrong. Calculate yours first; if far above market, overhead or unproductive hours may need changing.
How do I charge when every service differs?
Multiply your calculated hourly cost by estimated hours, plus materials. After ten quotes you will have ranges by service type and stop starting from scratch.
Hourly or fixed prices?
Fixed for customers: they want the total. Calculate hourly internally and present a fixed price. Absorb overruns caused by you; charge contractually agreed differences for customer changes.
Turn what you learned into your next step.
Tell us about your company and what you want to improve. We can explore the right tools, integrations or custom project together.