01 · Pricing and margin
Build a pricing decision from cost and margin inputs, not guesswork.
Start by separating direct unit cost, other per-unit costs, and the margin target you are trying to evaluate. A useful pricing process should make the assumptions visible before it produces an answer.
- List every cost that changes with each unit sold.
- Separate target gross margin from markup so the terms do not get mixed together.
- Recalculate actual gross profit and margin when the selling price changes.