Quick answer
To calculate selling price properly, a UK business needs to start with true cost, decide on a target margin, and then check the result against VAT, overhead, and market reality.
How it works
- Define the business question clearly.
- Use a practical framework rather than guesswork.
- Check the result against margin, VAT, cashflow, and operating reality.
- Use the relevant LumixAI tool to apply it properly.
The common mistake
Most underpricing comes from using supplier cost only and ignoring the real cost of getting the product or service delivered profitably.
What to include
- Purchase or direct labour cost
- Freight, duty, and handling where relevant
- Packaging or merchant fees
- Overhead allocation
- VAT treatment
- Target gross margin
Why UK VAT matters
VAT does not create profit, but it affects customer-facing price and cashflow timing. UK pricing decisions should not ignore it.
Apply this using LumixAI tools
The fastest way to use this in practice is to go straight to the right tool.
"Open Pricing Calculator →"Common questions
How do I calculate selling price?
Start with true cost, include overhead and VAT considerations, then apply a target margin and sense-check the result against the market.
Why do SMEs underprice?
Because they often ignore overhead, landed cost, and the difference between markup and margin.