Tunde is always busy. His phone rings every day. His workshop is full. Clients recommend him to other clients. But at the end of every month, he has almost nothing left.
He thinks the problem is that he needs more clients. He does not.
Tunde runs a phone repair shop in Lagos. He charges ₦3,500 to fix a cracked screen. He does about 60 repairs a month, which comes to ₦210,000 in revenue.
What Tunde has not sat down to calculate:
Total cost per repair: ₦1,400 in direct costs + (₦73,000 overhead ÷ 60 jobs) = ₦1,400 + ₦1,217 = ₦2,617
He earns ₦883 per repair. On 60 repairs, that is ₦52,980 profit — before his own salary.
Tunde is not paying himself. His price is covering the business, but not him.
This is extremely common. And it is almost always invisible until you do the numbers.
When business owners estimate their costs, they usually remember the obvious ones — the materials, the supplies, the thing they just bought. They forget three categories that quietly eat into profit every month.
1. Generator and electricity
This is a real business cost. If your generator runs 4 hours a day and fuel costs ₦900/litre, that is thousands of naira per month. Write it down.
2. POS and bank charges
If you receive payments via POS machine, your bank or fintech is taking a percentage of every transaction — typically 0.5% to 1.5%. On ₦500,000 in monthly revenue, that is ₦2,500 to ₦7,500 leaving your business before you count it as income.
3. Your own time
If you do work in your business — sewing, cooking, advising, designing — your time has a cost. If you spend 8 hours a day working and want to earn ₦150,000 a month for 22 working days, your time costs roughly ₦853 per hour. Every hour you spend on a job that does not cover that is reducing your effective income.
Fatima is a fashion designer. A client wants a simple fitted dress. Here is how Fatima normally thinks about it:
"Fabric costs about ₦12,000. I'll charge ₦25,000. That's ₦13,000 profit."
But here is what the ₦13,000 actually has to cover:
Her actual profit: ₦25,000 − ₦21,800 = ₦3,200 — not ₦13,000.
And that ₦3,200 does not include any wastage (off-cuts, fabric that did not work), any rework (if the dress needs adjustment), or any taxes.
She is not losing money — but she is making far less than she thinks. And if she raises her overhead (moves to a bigger studio, takes on an apprentice), she will need to either raise her price or make significantly more dresses to stay at the same income level.
Break-even is the point where you have made exactly enough money to pay all your costs — nothing more, nothing less.
If Fatima's monthly overhead is ₦60,000 and she makes ₦3,200 profit per dress, she needs to sell at least 19 dresses before she covers her overhead and starts making real money. Dress number 20 onwards is actual profit.
Knowing your break-even number is useful because it tells you whether your sales target is realistic. If Fatima can only realistically make 12 dresses a month, she needs to either raise her price or find a way to reduce her overhead.
1. Do you know your real cost per job — including your time, your generator, and your POS fees?
If you are not sure, pick your most common job or product and add it all up. You may be surprised.
2. Is your price above that number — with room left over for profit?
A price that just covers costs leaves you nothing when something goes wrong (it always does eventually).
3. When did you last change your price?
Costs in Nigeria change often. If your prices have not changed in 12 months but fuel, rent, or materials have gone up, your margin has quietly shrunk.
Want to do this properly with all the numbers — including your material spend, four types of labour (including your own), overhead categories, and an exact break-even calculation? Read the full guide: How to Use the Lucrive Pricing Calculator to Set Prices That Actually Make You Money