Lessons

Price, cost, and what is left

What it is

Three figures. What one unit sells for. What one unit costs you. How many go out in a month.

Why it matters

Selling a thing is the only shape here that is not tied to your hours. It is also the only one that can lose money faster the better it sells. What one unit sells for, minus what it costs you, is your margin. If the margin is nothing, every extra sale digs the hole deeper.

The method

Margin times units is what the sales bring in. Take off your fixed monthly costs. What is left is what this line really earns. Put delivery, packaging and fees into the cost. They are real money.

Example

Adeel sells at PKR 950. Each unit costs him PKR 570. Margin is PKR 380. Three hundred a month is PKR 114,000. Take off PKR 45,000 of fixed costs. He keeps PKR 69,000.