Pricing Calculator

When to Use This Skill

Use this skill when:

• A user needs to set prices for a service, product, or subscription
• A freelancer wants to calculate their hourly, project, or retainer rate
• A user is building tiered pricing packages (Good / Better / Best)
• Someone needs a profit margin analysis on their current or planned pricing
• A SaaS founder needs to structure subscription tiers with feature matrices
• A user says "how much should I charge" or "help me price this"

DO NOT use this skill for:

• Writing proposals or invoices (use proposal or invoice skills)
• Financial forecasting or P&L modeling (this calculates prices, not business plans)
• Investment or tax advice (consult a financial professional)

Quick Reference: Capabilities

Quick Reference: Pricing Models

DEFAULT: Tiered Packages -- most versatile for solopreneurs. When in doubt, build three tiers.

Quick Reference: Pricing Psychology

Quick Reference: Margin Formulas

CRITICAL: Markup and margin are NOT the same. 50% markup on $100 = $150 (33% margin). 50% margin on $100 cost = $200 (100% markup). Always clarify which one the user means.

Core Workflow

EVERY PRICING CALCULATION STARTS WITH THE USER'S COSTS AND INCOME GOALS -- NEVER SET A PRICE WITHOUT UNDERSTANDING WHAT IT NEEDS TO COVER.

Step 1: Gather Inputs

For freelancers/services: (1) What do you offer? (2) Monthly fixed costs? (3) Annual income goal? (4) Hours per week available? (5) Billable ratio? (Default: 60% solo, 70% with systems) (6) Competitor pricing range? (7) Target client?

For products/SaaS: (1) What is the product? (2) Cost per unit/user? (3) Monthly fixed costs? (4) Target MRR or annual revenue? (5) Competitor pricing? (6) CAC? (7) Target customer?

If the user provides items 1-3, proceed with defaults for the rest and flag them.

Brief prompt for vague requests:

I will build your pricing model. Quick details needed:
1. What do you sell? (Service, product, subscription)
2. What are your monthly costs to run the business?
3. What annual income do you want to take home?
4. What do competitors charge? (Even a rough range helps)
5. Who is your ideal customer?

Step 2: Calculate

Run the appropriate model. Show all math transparently so the user can verify and recalculate.

Freelance hourly: Annual income + expenses + tax reserve (30%) + profit buffer (10%) = total revenue needed. Divide by (hours/week x billable ratio x 48 working weeks) = minimum hourly rate.

Project-based: Estimated hours x hourly rate + complexity buffer (15-25%) = project rate.

Tiered packages: Base tier at 1x, mid at 2x, top at 3-3.5x. Apply charm pricing to at least the target tier.

Subscription: Calculate minimum price from margin target (cost / (1 - margin%)). Calculate CAC payback (CAC / price = months). Calculate LTV (price / monthly churn rate). Verify LTV:CAC ratio is at least 3:1. Set annual discount at 2 months free (16.7% off).

Product cost-plus: COGS + fulfillment = unit cost. Price = unit cost / (1 - target margin%). Apply charm pricing.

Value-based: Client's expected ROI x capture rate (10-20%). Sanity check: should be 1.5x-5x over cost-based calculation.

GATE: Present all calculations to the user before building the pricing document. Ask: "Does this math match your expectations? Any costs I should adjust?"

Step 3: Present the Pricing Document

Build a document with these sections: (1) Pricing Summary with tier names and prices, (2) What Is Included (comparison table), (3) Profit Margin Analysis, (4) Competitive Positioning (budget / mid-market / premium), (5) Psychology Applied, (6) Formulas for Recalculation.

Always mark one tier as "MOST POPULAR" or "Recommended." Default to the middle tier.

GATE: Present the complete pricing document for review before saving.

Step 4: Deliver

1. Save as pricing-[offering-name].md in the working directory (or user-specified path)
2. Confirm: "Your pricing model has been saved to [path]. It includes [X] tiers, [margin%] average margin, and recalculation formulas."
3. Offer: "Would you like a client-facing pricing page or a proposal using these rates?"

Example 1: Freelance Web Designer -- Rate + 3-Tier Packages

User says: "I am a freelance web designer. I want to make $120K/year. Expenses are $3,500/month. I work 35 hours/week. Competitors charge $100-$200/hour. Clients are small to mid-size businesses."

Step 2 calculation:

Revenue needed: $120,000 + $42,000 expenses + $48,600 tax (30%) + $21,060 profit (10%) = $231,660
Billable hours: 35 hrs/wk x 60% x 48 weeks = 1,008 hrs/yr
Minimum rate: $231,660 / 1,008 = $229.82 -> $230/hr (above competitor range)
Recommended: increase billable ratio to 70% -> 1,176 hrs -> $196.99 -> $200/hr

Tiered packages (typical website = 20-40 hours at $200/hr):

Package comparison table:

Delivered: Saved to pricing-web-design.md with 82-88% margins, recalculation formulas, and competitive positioning (mid-to-premium).

Example 2: SaaS Founder -- Subscription Pricing

User says: "I built a project management tool for freelancers. $2.80/user/month hosting. $8K/month fixed costs. Want $50K MRR. CAC is ~$120. Competitors: $10-$15 basic, $30-$50 pro."

Step 2 calculation:

Margin floor: $2.80 / (1 - 0.80) = $14/mo minimum at 80% margin
CAC payback: $120 / 4 months = $30/mo target
LTV at 7% churn: $15/0.07=$214 (1.8:1), $29/0.07=$414 (3.5:1), $79/0.07=$1,129 (9.4:1)
Blended ARPU (40/45/15 mix): $30.90 -> 1,618 users to hit $50K MRR
Break-even: $8,000 / ($30.90 - $2.80) = 285 paying users

Pricing tiers:

Feature matrix:

Delivered: Saved to pricing-project-management-saas.md with LTV:CAC analysis and break-even at 285 users.

Pricing Tier Framework

CRITICAL: The Professional tier must be the obvious best value. Starter-to-Professional gap should feel small. Professional-to-Premium gap should feel large. This is the decoy effect.

Anti-Patterns

• DO NOT set prices based solely on competitor pricing. Start from your own costs and income goals. Competitors are a reference, not a formula.
• DO NOT create more than 4 pricing tiers. Three is ideal. More causes decision paralysis.
• DO NOT hide the recommended tier. Always label one tier "MOST POPULAR." Without a nudge, clients default to cheapest.
• DO NOT price below cost without a documented strategy. Loss-leader pricing requires a clear upsell path and time limit.
• DO NOT use round numbers for everything. Charm pricing ($4,997 vs $5,000) increases conversions. Exception: ultra-premium brands.
• DO NOT present pricing without showing what is included. Prices without context trigger sticker shock.
• DO NOT confuse markup with margin. 50% markup on $100 = $150. 50% margin on $100 = $200. Clarify which the user means.
• DO NOT skip the profit buffer. Always include 10-15% on top of income goals.
• DO NOT ignore market position. New freelancers cannot charge agency rates without a portfolio. Veterans should not undercharge.
• DO NOT set subscription prices without LTV and CAC analysis. $10/mo sounds good until CAC is $200 and churn is 10%.

Recovery and Troubleshooting

User Does Not Know Their Costs

1. Walk through typical freelancer costs ($350-$2,300/mo range: software $100-$500, insurance $100-$300, marketing $0-$500, education $50-$200, equipment $100-$300, workspace $0-$500)
2. Use midpoint ($1,325/mo) as default, flag it clearly
3. Include formula so they can recalculate with real numbers later

User Is Severely Underpricing

1. Show the math: "At $50/hr with your expenses, you net $18/hr after taxes -- below minimum wage"
2. Show what the rate should be based on their goals
3. Suggest a transition plan: raise new client rates immediately, give existing clients 30-day notice, full rate within 3-5 months
4. Flag it clearly but respect the user's final decision

Competitor Data Unavailable

1. Use industry benchmarks: design $75-$250/hr, dev $100-$300/hr, marketing $100-$350/hr, coaching $150-$500/hr, writing $50-$200/hr, SaaS B2B $15-$500/mo, SaaS B2C $5-$50/mo
2. Flag as industry-wide ranges, recommend surveying 3-5 peers
3. Proceed with midpoint of relevant range

Multiple Services to Price

1. Price each service independently using the same base rate
2. Build bundle packages at 10-20% off individual pricing
3. Keep to 3 tiers maximum per service -- never 3 services x 3 tiers = 9 options

User Rejects Pricing After 3 Attempts

1. Diagnose: "Is the total too high, or is the value not clear enough?"
2. If too high: reduce scope, not margin. Remove lowest-value deliverable.
3. If value unclear: reframe with price-to-value language
4. If disagreement persists: deliver with margin warning and suggest revisiting after first quarter

File Write Fails

1. Report error, present pricing document as formatted text in chat
2. Offer different file path. If 3 attempts fail, stop and present in chat.

Pre-Delivery Checklist

DO NOT SKIP ANY ITEM.