Sometimes it’s hard to understand the leverage that good pricing provides. (Or that bad pricing takes away.)

I created this simple pricing calculator to show how small changes in price, volume, and costs, can have a huge impact on your bottom line. Use this to help figure out how to set list prices and adjust pricing once you start negotiating your proposal.

The spreadsheet has 2 sets of inputs for price, volume, variable cost, and fixed costs. I suggest putting your current data in the first scenario, then using the second scenario to explore possibilities. (If you don’t have exact numbers for some of the inputs, guesstimates are a good start.)

Note how price changes have more impact on profit than similar changes in volume, fixed cost, or variable cost. To see this, make the second scenario an exact duplicate of the first scenario, then change one input at a time. Which one has the most impact on profit?

You can also see your breakeven volume– the amount you would need to sell to make the same profit in the first scenario, but using the second scenarios price and cost parameters.

What are the implications for your business?
Download the Pricing Calculator (xls file).

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