Bisi has been running a tailoring business in Ibadan for four years. She is fully booked. Her phone rings every day. She has a waiting list for custom orders. And yet, at the end of every month, she struggles to pay herself a reasonable salary and wonders where the money went.
She is not lazy. She is not a bad businessperson. She has a pricing problem — and she does not know it.
Bisi's situation is one of the most common I encounter among Nigerian MSME owners. The symptoms are clear: constant busyness, modest revenue, almost no profit. The cause is almost always the same: prices that do not cover the real cost of running the business.
This is where we need to start, because many business owners track the wrong number.
Revenue is the total amount you collect from customers. If you sew 20 dresses this month at ₦15,000 each, your revenue is ₦300,000.
Profit is what remains after you subtract all costs. If your materials cost ₦80,000, your assistant costs ₦40,000, your rent allocation is ₦20,000, and your other overheads total ₦15,000, your total costs are ₦155,000.
Profit = ₦300,000 − ₦155,000 = ₦145,000.
That ₦145,000 must cover your own salary, your business reinvestment, your tax savings, and any emergencies. If ₦145,000 feels tight for all of that, your prices may be too low.
Your floor price is the minimum you can charge and still break even. Below this price, every order you take is costing you money. Not earning you money — costing you money.
The floor price is the most important number in your pricing. Many Nigerian business owners have never calculated it.
Floor Price Formula:
Floor Price = (Total Monthly Costs) ÷ (Number of Units Sold Per Month)
"Units" can be dresses sewn, projects completed, kilos of food prepared, hours of service delivered — whatever your business output is.
Let us work through Bisi's numbers properly.
Monthly costs:
Monthly output: 20 dresses
Floor price: ₦225,000 ÷ 20 = ₦11,250 per dress
Bisi is currently charging ₦15,000 per dress — which looks like it covers costs. But she had not included her own salary in her cost calculation. When she adds it, her floor price is ₦11,250 and her margin is only ₦3,750 per dress (25% margin).
Is 25% enough? That depends on her goals, market, and growth plans. But at least she now knows the real number — and can make decisions based on it.
The most common mistake: Business owners calculate costs without including their own labour. Your time has a cost. If you are not paying yourself what your time is worth, you are subsidising your customers.
If your calendar is full every month and your savings account is not growing, your prices are covering costs but leaving no surplus. You are running a charity that looks like a business.
When your business grows to the point where you need staff but cannot afford to pay them without losing money, your prices were set for one-person operation and were never adjusted.
If a week without working means your business immediately has a cash problem, your prices do not include enough margin to sustain operations without your constant direct input.
Healthy businesses can afford to be selective. If you take every order regardless of profitability because you need the revenue, your pricing is not high enough to give you options.
Once you have your floor price, your recommended selling price adds two more layers:
Safety Buffer: A percentage above the floor price that protects you from cost fluctuations. If your fabric prices go up by 10% next month, your buffer means you are not immediately losing money.
Profit Margin: The actual profit you intend to make above all costs. This is what you use to grow the business, save for taxes, invest in equipment, and pay yourself properly.
Recommended Price Formula:
Recommended Price = Floor Price × (1 + Safety Buffer%) × (1 + Profit Margin%)
Example with Bisi's numbers:
Bisi is charging ₦15,000. She is slightly below where she should be — and just above her floor price. A small price increase to ₦17,000 would make a meaningful difference to her monthly profit without making her uncompetitive.
"But everyone else in Ibadan charges ₦15,000 for a dress. If I charge ₦17,000, I will lose clients."
This is the fear that keeps businesses trapped at low prices. Let us address it honestly.
First: you do not know for certain that ₦17,000 loses you clients. Most business owners assume price sensitivity without testing it. A price increase of 10-15% loses far fewer clients than most owners fear.
Second: if everyone in your market is charging a price that does not cover real costs, everyone is losing money. The correct response is not to join them — it is to find customers who value your work and will pay a sustainable price.
Third: the clients who leave over ₦2,000 are often the clients who take the longest to pay, make the most requests, and generate the most stress. Price increases frequently improve your client quality, not just your margins.
Lucrive's pricing calculator includes a diagnosis feature. You enter your actual selling price alongside your calculated costs, and Lucrive tells you:
If you have never done this calculation before, the result is often clarifying. Some business owners discover they are just fine and have been worrying unnecessarily. Others discover they have been quietly losing money on their bestselling product for years.
Both findings are valuable — but only the business owner who runs the numbers knows.
If your calculations show your prices need to increase, here is how to do it without drama:
① Increase on new customers first — existing clients do not need to know you raised prices. Simply charge new clients the updated rate.
② Give existing clients advance notice — "From [date], my prices will increase to [amount]. Existing clients get a 60-day grace period at current rates." This is professional and gives them time to plan.
③ Emphasise what they get — when raising prices, lead with what has improved: faster turnaround, better materials, more experience. You are not charging more for the same thing; the same thing has become more valuable.
④ Hold firm — the clients who accept the increase are the ones your business is built on. The ones who leave were not paying you enough anyway.
Before you price your next job, know your floor price. Not roughly. Exactly.
Enter your monthly costs into Lucrive's pricing calculator, enter your monthly output, and let it calculate the number you cannot go below without losing money.
Every quote you give after that will be informed rather than guessed. And over time, your business will look a lot more like what you imagined it would when you started.
Calculate your floor price free at lucrive.io →
People and businesses in our examples are illustrative, not real Lucrive customers. Figures are worked examples: confirm your own position with a qualified tax adviser.