Small-business guide
Small Business Pricing Guide
Pricing must cover product or service costs, overhead, tax treatment, discounts, returns and a profit allowance.
Updated 16 October 2026 • Reviewed by Tools by Layna Editorial Team • General information only
The straight answer
Pricing must cover product or service costs, overhead, tax treatment, discounts, returns and a profit allowance.
What matters most
| Priority | How to apply it |
|---|---|
| Main driver | Margin and markup are different. |
| Downside risk | GST-inclusive revenue is not all business income for a registered business. |
| Verification point | Competitor prices are context, not proof of viability. |
How to use this guide
Build the price from direct costs, overhead allocation, payment and fulfilment costs, returns, GST or tax treatment and a profit allowance. For this page, the comparison is only valid when the monetary basis and timing are consistent.
- For small business pricing guide, name the decision first so the model does not drift into a different question.
- Validate the base case against this page-specific point: Margin and markup are different.
- Build a realistic downside scenario around this constraint: GST-inclusive revenue is not all business income for a registered business.
- Before acting, verify this final check against current statements, contracts or official guidance: Competitor prices are context, not proof of viability.
Worked example
Suppose a product sells for$80 on a consistent GST-exclusive basis. Product, fulfilment and payment costs total$45 per sale, leaving $35 contribution before fixed overhead. A 10% discount reduces revenue to$72 and contribution to$27. If monthly fixed costs are$540, the arithmetic break-even is 20 discounted sales ($540 ÷$27), assuming those costs and no other variable expenses.
What can change the answer
- For small business pricing guide, confirm whether every amount is gross or net and whether GST is included, excluded or not applicable.
- Separate fixed costs, variable costs, one-off costs, interest and fees instead of hiding them inside one total.
- Use actual payment dates and matching weekly, monthly or annual periods so timing does not distort the comparison.
- Stress-test the result against the risk highlighted on this page: GST-inclusive revenue is not all business income for a registered business.
Common mistakes
- Changing a plan from a single small business pricing guide result before a repeatable baseline exists.
- Ignoring the page’s main limitation: GST-inclusive revenue is not all business income for a registered business.
- Changing course before checking this review signal: Competitor prices are context, not proof of viability.
- Choosing the most attractive headline figure while ignoring cash flow, fees, timing or the cost of being wrong.
Sources and method notes
- business.gov.au: choosing a pricing strategy — Setting prices from costs, value, competitors and planned discounts.
- Business Victoria: break-even, margin and markup — The distinction between markup, margin and break-even sales.
Related calculators and guides
Frequently asked questions
Is a 50% markup the same as a 50% margin?
No. If cost is $60 and price is $90, the $30 contribution is a 50% markup on cost but a 33.3% margin on price. State the denominator whenever comparing targets.
Can I copy a competitor's price and assume mine is profitable?
No. Your costs, returns, discounts and overhead may differ. Use competitor prices as context, then test whether your own contribution can cover costs and the profit target.
Should I model the list price or the usual sale price?
Model the price customers are likely to pay, including planned discounts and the correct GST basis. A margin calculated only at a rarely achieved list price can overstate viability.
Bottom line
Pricing must cover product or service costs, overhead, tax treatment, discounts, returns and a profit allowance. Use small business pricing guide to compare scenarios and expose the assumption doing the most work. Verify current rates, fees, GST treatment and contract terms before committing.