AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Cost-plus pricing means working out the full cost of one unit, then adding a fixed markup for profit. In Nigeria the full cost must include transport, power (often generator fuel), labour, a share of overheads and wastage, spread over the units you can actually sell; leaving these out is the most common reason a busy small business makes little money.
The method in four steps
- Cost one batch, order or job in full.
- Divide by the number of units you can actually sell from it, after wastage.
- Add your markup.
- Round to a sensible price and check it against what customers will pay.
Step 1: the full cost list
| Cost | What to include | Often forgotten |
|---|---|---|
| Materials | Ingredients, raw materials, goods for resale | Price rises since you last bought |
| Packaging | Bottles, bags, labels, boxes | Labels and seals |
| Transport | Market trips, loading, haulage | Your own fuel or fares |
| Power | Grid tokens, generator fuel for production hours | Fuel for freezers and lighting |
| Labour | Wages for the time spent on this batch | The owner's own time |
| Overheads share | Rent, phone, levies spread over a month's output | Annual payments like rent and permits |
| Wastage | Spoilage, breakage, failed units | Free samples and tasting |
Worked example: bottled juice
Example only. A juice maker in Lagos produces batches of 100 bottles.
| Item per batch | ₦ |
|---|---|
| Fruit | 45,000 |
| Sugar and other ingredients | 5,000 |
| Bottles and labels (100 × ₦200) | 20,000 |
| Transport to and from market | 6,000 |
| Generator fuel for blending and chilling | 8,000 |
| Labour | 15,000 |
| Share of overheads (₦120,000 a month ÷ 20 batches) | 6,000 |
| Total batch cost | 105,000 |
Five bottles in every batch spoil or go as samples, so only 95 are sold. Full cost per bottle is ₦105,000 ÷ 95 ≈ ₦1,105.
With a 30% markup: ₦1,105 × 1.30 ≈ ₦1,437, rounded to ₦1,450. At that price the margin on each bottle is about ₦345, or 23.8% of the price.
The same product, priced on partial costs
Suppose the owner had counted only fruit, sugar, bottles, labour and overheads: ₦91,000 for 100 bottles, or ₦910 each. A 30% markup gives about ₦1,183, which they might round to ₦1,200. Against the true cost of ₦1,105, that leaves about ₦95 per bottle, a margin of 7.9%. The business would be busy and still struggle to pay its bills.
A costing sheet you can copy
Set up one row per input with four columns: quantity used per batch, price paid, date of that price, and cost per batch. Below the inputs, add rows for units produced, units lost, units sold, full cost per unit, markup, and price. The date column matters most: it shows at a glance which costs are stale. When a supplier changes a price, update that one cell and the selling price recalculates.
Markup is not margin
A 30% markup on cost does not give a 30% margin on the price. In the example, ₦1,105 marked up by 30% gives ₦1,437; the margin is ₦332 ÷ ₦1,437, about 23%. If you need a 30% margin, divide cost by 0.70: ₦1,105 ÷ 0.70 ≈ ₦1,579. Decide which one you mean and use it consistently.
Taxes and price changes
If you are VAT-registered, add VAT on top of your cost-plus price; it is not part of your margin. Forvis Mazars' March 2026 summary of the Nigeria Tax Act 2025 says the rate stays at 7.5% and that businesses with turnover up to ₦100 million and fixed assets up to ₦250 million (excluding professional services) are exempt from charging it. This is information, not tax advice.
Recost whenever an input moves. The National Bureau of Statistics put food inflation at 19.59% year on year in September 2026 (Voice of Nigeria, 16 October 2026); for a food business, a price set in January can be well below cost by mid-year. Keep the costing sheet and update it each time you restock.
Cost-plus for services
The same method works when you sell time rather than goods. The main cost is hours, and the trap is pricing only the materials.
Example only. A make-up artist in Port Harcourt costs one bridal client: products used ₦6,000, transport to the venue ₦4,000, three hours of her time valued at ₦2,500 an hour (₦7,500), and a share of phone, training and kit replacement of ₦2,500. Full cost is ₦20,000. A 40% markup gives ₦28,000. If she charged ₦15,000 because the products only cost ₦6,000, she would be paying to work.
Value your own time at what you could earn doing the same work for someone else, and include travel and waiting time. For trade-specific guides, see pricing salon and barber services and pricing a restaurant menu.
Limits of cost-plus
- It ignores what competitors charge and what customers will pay. Use it as a floor, not the final answer.
- It needs a realistic volume for spreading overheads; if sales fall, the overhead share per unit rises.
- For services, count all your time, including travel and admin.
See also working out your break-even point and setting wholesale and retail prices.
Where Pryme fits
Payment fees are a cost per sale too. Pryme's bank-transfer checkout charges nothing, which you can add to the cost list.
Questions people ask
What is cost-plus pricing?
Setting a price by adding a fixed markup to the full cost of producing or buying one unit.
How do I calculate selling price from cost?
Selling price = full unit cost × (1 + markup). For a target margin instead, divide cost by (1 − margin).
What costs should I include when pricing a product in Nigeria?
Materials, packaging, transport, power or generator fuel, labour, a share of rent and overheads, and an allowance for wastage.
What is the difference between markup and margin?
Markup is profit as a share of cost; margin is profit as a share of selling price. A 30% markup is about a 23% margin.
Sources
- VAT and Nigeria's 2025 tax reforms: key changes for businesses (Forvis Mazars, 16 Mar 2026) · accessed Oct 2026
- Nigeria's headline inflation drops to 14.63 per cent (Voice of Nigeria, 16 Oct 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.