October 12, 2026

How to Really Account for

Rising Costs in Pricing


The Bureau of Labor Statistics shows dramatic price increases from a year ago. Gasoline is up 27.4%, Electricity is up 3.8%, Postage is up 12.8%, Ground coffee is up 4.8%. Ground beef is up 9.6%.


These increases don’t include rising insurance and other business costs. As a result, your employees feel “pinched” because their paychecks don’t go as far.


They, too, want raises.


Instead of “I’ll just raise prices X% thinking, here’s how to really increase pricing as a result of increasing costs.


Let's take the example of an accountant who bills by the hour or an HVAC, plumbing service company, etc. who generates revenue through billable hours.



Simple example – insurance cost:


Assume that your insurance is increasing by $10,000 next year. If your company has 5,000 billable hours, that means your overhead cost will increase by $2/hr. 


Simple example – raises for field/direct cost employees


Assume you give all field/direct cost employees a 5% raise to cover the increasing cost of inflation which is averaging 3.4% at the moment. Labor costs need to go up 6.5% to cover the cost of additional payroll taxes, worker’s compensation, and other employee benefits. This assumes that your benefits are 30% of wages.


Simple example – raises for office employees


You are increasing all overhead salaries by $15,000 total. Assuming a 30% employee benefits, then the raise will be $19,500. Assuming the same 5,000 billable hours as above, the overhead cost will increase $3.90.


New pricing for a job/project


Assuming you have all three scenarios above, then, if you are estimating a job that will take 16 hours, then you need to add 6.5% to the cost of labor and $5.90 to your overhead cost per hour (total of $94.40 – 16X5.90) to your overhead cost).   


If you feel that you can’t do this – are you willing to take less profit for each job you win? 



___________________________________________________________________________________

How to analyze your financial statements in less than 10 minutes a month



Your bookkeeper can enter the data (although I prefer that you do it) into the Financially Fit Business software (www.financiallyfit.business). Click a button and you see the trends. If your financial trends are going the wrong way, you can and should take actions to reverse the trends. The help part of the software gives you suggested places to look. Or, we can review them with you.


Click here to schedule a time (takes about 10 minutes)


Reviewing timely, accurate financial statements helps you spot minor issues and resolve them before they become major cash flow or other crises.



We’ve done the impossible – made financials fun.


The Hoot & Profit app is live. Invest a minute or two a day to do some fun activities which build your financial muscle and helps you be more profitable.

Tell me what you think and changes you’d like to see (We’ll include them where possible in the next update).



Here’s my thank you for trying Hoot & Profit:

When you accumulate 100 pellets, usually in less than a week, send me a screen shot of the total and I’ll send you an autographed copy of my book, The Courage to be Profitable or 101 Dumb Financial Mistakes Business Owners Make.

Click the QR Code to download the app in Google Play or the Apple Store.


www.hootandprofit.com



Want to see whether Financially Fit Business is a fit for you and your clients?


Click here to schedule a brief introductory call.


This Week's The Financially Fit Business Podcast:



What Whip City has to do with the Accounting Profession


In this episode I discuss the events that occurred in Whip City around the turn of the 20th century and their impact on the accounting.


Click here to listen: https://financiallyfitbusinesspodcast.podbean.com/

Books/Audios that could help your business and you.


Bending Reality takes most of the self-help advice and distills it into two things: either you’re living in contraction or you’re living in expansion. You won’t be the same person if you read, finish, and implement the actions described in this book.

 

To order on Amazon: https://amzn.to/3RPnmMC





This is my Amazon affiliate link. I get a small commission. You do not pay extra for the book.

 

Ruth King| www.FinanciallyFit.Business | 770-729-8000 | rking@financiallyfit.business

STAY CONNECTED
Facebook  Web  LinkedIn