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Pricing Floor Calculator

Find the minimum price per client that covers your overhead, your direct costs and the profit you need.

This calculator is for service businesses that price per client. If you run a bookkeeping firm, a marketing agency, a cleaning company, a consulting practice, or an IT support shop, it tells you the lowest monthly price you can charge and still pay your bills and keep a profit. Enter your numbers below. The results update as you type.

Overhead share per client
$600
Profit per client
$188
Minimum price per client
$938

You charge $650, which is $288 below your floor for each client. That's $5,750 a month across 20 clients. If this number is higher than what you've been charging, you have your answer about why cash flow has been tight.

How the pricing floor is calculated

Minimum price per client = (Monthly Fixed Costs ÷ Number of Clients + Variable Cost per Client) ÷ (1 − Target Margin). First you find what each client costs you. Then you divide by one minus your margin, so the margin is a share of the price you charge.

Here is a worked example using the default numbers above:

  • Monthly fixed costs are $12,000 and you have 20 clients.
  • Overhead share per client is $12,000 ÷ 20 = $600.
  • Add $150 in variable cost per client. Your cost per client is $750.
  • With a 20% target margin, the minimum price is $750 ÷ 0.80 = $937.50.
  • A client paying $650 is $287.50 below the floor. Across 20 clients, that is $5,750 a month you are not collecting.

The floor tells you where you break even with profit built in. To see where you break even with no profit at all, use the break-even calculator. To check the margin you earn today, use the profit margin calculator, or read our guide on how to calculate profit margin.

What to do if you are below your floor

Being below the floor means every client you add makes the problem bigger. You have four ways to fix it.

  • Raise prices at renewal. Renewal is the natural time to move a client up. Give 30 to 60 days of notice and explain what they get for the price.
  • Cut variable cost per client. Look at the software, labor hours, and supplies each client uses. Automate repeat tasks and set clear limits on scope.
  • Drop or reprice your lowest-margin clients. Sort clients by what they pay versus what they cost you. Offer the bottom group a new price, or let them go.
  • Add clients only if overhead stays flat. More clients lower your overhead share only if you do not need new staff, space, or tools to serve them. If adding clients means adding fixed costs, run the numbers again first.

Pricing floor questions

What counts as a fixed cost?

A fixed cost is anything you pay each month whether you have 5 clients or 50. Rent, software subscriptions, insurance, your own salary, admin staff, phone and internet, and loan payments all count. If the bill stays the same when you add or lose a client, it is fixed.

Why is the margin a percent of price and not a percent of cost?

Your profit margin is measured against what the client pays you, so the calculator divides your cost by one minus your margin. If you add 20% on top of cost instead, your real margin is only about 16.7%. Working from price makes sure you actually keep 20 cents of every dollar you bill.

How often should I recalculate my pricing floor?

Recalculate at least once a quarter, and any time your costs or client count change in a big way. A new hire, a rent increase, a new software tool, or losing two clients can all move your floor. Check it again before you send renewal pricing.

Should I charge every client the same floor?

No. The floor is an average. Clients who take more time or cost more to serve should pay more than the floor, and simple accounts can sit closer to it. The rule is that no client should pay less than what it costs you to serve them plus your target margin.

Not sure what your real fixed and variable costs are? Book a free 30-minute Cash Flow Review and we'll work through them with you.

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