Pricing analysis
A well-set price covers the product cost, taxes and fees, and still helps pay for the company's overhead. The analysis shows whether that's what is happening today.
What we do
We calculate the real cost of each product or service, including sales taxes, commissions and card fees. From there, we arrive at the contribution margin of each item, compare it with the current price and build a markup calculated on price, not on cost.
What you get
- Cost per item, with all the expenses that vary with each sale.
- Contribution margin by product, showing which items carry the company.
- Suggested price and break-even point to review your price list with confidence.
Who it is for
Companies that set prices by adding a percentage to cost, that give discounts without knowing the effect on results, or that sell a lot and earn little.
Want to understand the difference between the two methods? Read Markup or contribution margin.
How it works
- Cost survey: We gather the purchase or production cost of each item and the expenses that vary with each sale.
- Margin calculation: We calculate the contribution margin of each product or service and the company's break-even point.
- Market comparison: We compare the calculated price with what competitors charge and what customers are willing to pay.
- New price list and rules: We deliver the revised price list and a simple rule for discounts and price adjustments.
Based in Maceió, serving clients remotely
Farol is based in Maceió, Alagoas, Brazil, and serves companies across the country. We work with retail, services and industry in any city. The work is based on reports from your system and video meetings.
If you're short of cash despite good sales, the best place to start is the free financial check-up.
Frequently asked questions
What is the difference between markup and contribution margin?
Markup is applied to cost to arrive at the price. Contribution margin shows how much is left from each sale after variable expenses. We explain it with examples in the article Markup or contribution margin.
Does the analysis work for companies that sell services?
Yes. In that case, the main cost is usually the team's time, and the calculation starts from the hours involved in each service.
How often should I review my prices?
Whenever your supplier's cost, tax rate, card fee or sales volume changes. If nothing changes, a review every six months is enough to keep margins from shrinking without anyone noticing.