This Pricing Mistake Could Be Costing You Thousands In Profits
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- Опубликовано: 18 сен 2024
- With so many opinions on how to price, it is no wonder that many small business owners fail to keep this one thing in mind when setting their prices. By doing so, they are probably costing themselves profit. No matter how you price, you MUST keep this one thing in mind.
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What Mistake Do You Think Cost You The Most Money Since You've Had Your Business? - Tammy
#1 Mistake: Not watching your videos.
@@mail06513 ahh....
New sub... Love it... So keep doing what you do best... Thank for sharing your knowledge
Ah, thanks! Glad to have you aboard! - Tammy
You are fantastic
A good one
I thought you calculate the taxes after the expenses. should that $49.25 be taxed
Typically your taxes are going to be after costs and expenses (not including any money you pay yourself unless you use a normal payroll). That's why I always recommend setting aside a percentage of your profits for those taxes. But as always, seek a tax professional for your particular situation - Tammy
(Yearly p&l) If I had 105,000 in sales - 15,500 cogs - 32,000 expenses = 57,500 profits? 57,000/105K=54% profit margin? So I have a service industry where I have 44 clients. Would I say 54% of one clients yearly sales is my profit? Cause I sure don’t feel like I’m making those kinds of numbers?
Hey there. Great question. Let me ask this. Do you have a service that you personally have to spend time providing? Your COGS should include any labor (even if it is you) for "employee" time. So normally you would just do a "fair" wage. Something you would have to pay someone else to do. Here is a video that I talk about it more: ruclips.net/video/NjRFOls_jKM/видео.html As for percentages, yes, you would divide by sales to get it. So your net profit is the 54%. Then that goes to taxes, retained earnings (money you are putting back into the business) and then owners draw. Are you using money for anything else by chance? - Tammy
🎉🎉🎉
What category would reinvestments go under in my p&l? I’m the owner of a new handyman business and have about 35% going back into the business for tools.
Hey there. The money you keep in the business doesn't go on your P*L it is just kept in the bank accounts. However, once you spend the money, it will then show up on P*L for what you purchase. Tools are tricky as sometimes you aren't putting them on a P&L unless they are disposable. Normally they are just assets. You are exchanging the cash asset on your balance sheet for the tool asset. However, I see a lot of folks put it under expenses, and just let the CPA do the depreciation on them. Confusing I know. LOL
@@BadassBusinessOwners Thanks for clarification, definitely makes sense.
Excellent video, extremely helpful. How do I calculate the Retail sales price based on a profit % I want to earn. Is it possible to work the calculation backwards seeing how expense is based off of the sell price? Can you do a video on this? Thank you.
You can do it, but make sure you work it both ways. So for example say you want to make $10 profit on something. And you are shooting for a 25% profit. You would divide the $10 by the 25% and get a $40 purchase price. Then I would work it reverse and plug in what we know our cogs are and the estimated amount for expenses. Hope that helps - Tammy
@@BadassBusinessOwners Thank You!