Business Income Must Be Sufficient to Support Personal Life

Are you working in your business because you need the money? If so, then the business you are choosing to run must make enough money to provide you with the lifestyle you want.

If you do not need to make money, then there is no reason for you to be reading an article on pricing. Nothing for you to see here.

Combination Income Statement

Take a look at the income statement above. What I have done is start with a standard business income statement and figured out how much income the business will generate. I have taken the business and personal taxes out of the calculation. The net after tax amount is shown and then the business owner makes a list of their personal expenses, which cannot exceed the available income.

Work from the Bottom Up — Personal Needs

You can work with this from the bottom up or the top down. If you work from the bottom up then you figure out how much money your business needs to generate in order to provide you with the money you need for your lifestyle.