Build Your Price — A Visual Approach to Getting Your Pricing Right
Pricing is the single biggest lever for profitability, yet most businesses set prices by guessing, copying competitors, or adding a round number to their costs. This visual price builder lets you stack your actual costs, set your target margin, and see the price that results — layer by layer. Change any input and watch the price adjust instantly.
How to use
Add your cost components (materials, labour, overheads, delivery, marketing, and anything else). Set your target profit margin using the slider. Toggle VAT on or off. The visual stack on the left shows each layer of your price proportionally, and the summary shows your total cost, profit, markup, and final selling price.
Understanding Your Price Structure
Your price is made up of layers: each cost component, your profit margin, and VAT if applicable. The visual stack makes the proportions obvious. If one cost block dominates the stack, that is where price sensitivity lives. A small increase in your largest cost has a bigger impact on your margin than a large increase in a small cost. Understanding this helps you focus your cost control efforts where they matter most.
Frequently Asked Questions
What is the difference between margin and markup?
Margin is profit as a percentage of the selling price. Markup is profit as a percentage of the cost. They are calculated differently and confusing them is one of the most common pricing mistakes. A 30% margin means you keep 30p of every pound you sell. A 30% markup means you add 30p to every pound of cost. A 30% margin actually requires a 42.9% markup.
How do I know if my price is right?
Your price is right if it covers all your costs, generates the profit margin you need to sustain and grow the business, and customers are willing to pay it. If you are winning every quote, your prices may be too low. If you are losing most quotes, they may be too high. A healthy win rate is typically 30-50%.
Should I price based on cost or market rate?
Ideally, both. Cost-based pricing sets your floor, the minimum you can charge without losing money. Market-based pricing sets your ceiling, the maximum customers will pay. Your actual price should sit between the two. If the market rate is below your cost floor, you have a fundamental business model problem.
How does VAT affect my pricing?
If you are VAT registered, you add VAT to your price and pass it to HMRC. Your profit margin should be calculated on the ex-VAT price, not the VAT-inclusive price. For B2B customers who reclaim VAT, the VAT-inclusive price is irrelevant. For B2C customers who cannot reclaim it, the VAT-inclusive price is what they actually pay.
How often should I review my prices?
At minimum, annually. But also whenever your costs change significantly, when you introduce new products or services, when market conditions shift, or when you notice your margins declining. Many businesses set prices once and never revisit them, which means inflation erodes their margins year after year.
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