You sell online courses. Each sale seems profitable, but are you accounting for all costs?
Scenario Without Overhead
Production cost per course: £25 (video editing, platform fees)
Selling price: £50
Profit: £25
Margin: 50%
Looks great! But wait...
Scenario With Realistic Overhead
Per-course costs you forgot:
- Payment processing (2.9% + £0.30): £1.75
- Email marketing platform (per student): £1.20
- Customer support (10 min @ £30/hr): £5.00
- Refunds (5% rate): £2.50
- Total overhead: £10.45
Let's round to £10 per course.
New calculation:
- Direct cost: £25
- Overhead: £10
- Total cost: £35
- Selling price: £50
- Profit: £15
- Margin: 30%
Your margin just dropped from 50% to 30% when you included real overhead.
The Revenue Illusion
Month 1: Ignoring overhead
- Sell 100 courses at £50
- Revenue: £5,000
- Costs: £2,500
- "Profit": £2,500 ✨
Month 1: Including overhead
- Sell 100 courses at £50
- Revenue: £5,000
- Direct costs: £2,500
- Overhead: £1,000
- Actual profit: £1,500 😬
You "lost" £1,000 because you forgot overhead.
Common Overhead Costs People Forget
Digital Products:
- Payment processing fees
- Platform/hosting fees
- Email marketing
- Customer support time
- Refunds and chargebacks
- Software subscriptions
Physical Products:
- Shipping materials
- Returns and damaged goods
- Inventory storage
- Quality control time
- Photos and listings
- Marketplace fees
Services:
- Proposal/quote time
- Client communication
- Invoicing and payments
- Professional insurance
- Software and tools
- Travel/commute
How to Fix It
- Track everything for one month to find hidden costs
- Calculate per-unit overhead (total overhead ÷ units sold)
- Add it to your cost in pricing calculations
- Review quarterly as costs change
The Bottom Line
If you price based only on direct costs, you're underpricing by 10-30%.
Use the calculator with realistic overhead to see your TRUE margin.
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