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Methodology

Customer Segment Pricing Planner methodology

Compare segment-specific contribution and service cost.
Duc Nguyen X.By Duc Nguyen X.· Founder, Margin101Last reviewed: View update historyMethodology

Educational only: Business decision support, not accounting, tax or legal advice.

Privacy: Calculations run locally; Margin101 does not receive your commercial inputs.

Update policy: Reviewed when formulas or official dependencies change.

Scope: Market-neutral small-business planning using your own assumptions.

1. Formulas and units

Contribution Delta Ex Tax
contributionDeltaExTax = segment contribution − standard contribution

Where

standardUnits
Standard units (whole standard-segment units/comparison period)Source: User assumption
segmentUnits
Segment units (whole target-segment units/comparison period)Source: User assumption
contributionDeltaExTax
Contribution Delta Ex Tax (currency units, ex tax)Source: Calculated output
standardContributionExTax
Standard Contribution Ex Tax (currency units, ex tax)Source: Calculated output
segmentContributionExTax
Segment Contribution Ex Tax (currency units, ex tax)Source: Calculated output
Standard Contribution Ex Tax
standardContributionExTax = (standard price − unit variable cost) × standard units

Where

standardPriceExTax
Standard price (currency units/standard-segment unit, ex tax)Source: Business record
unitVariableCostExTax
Variable cost (currency units/product unit, ex tax)Source: Business record
standardUnits
Standard units (whole standard-segment units/comparison period)Source: User assumption
standardContributionExTax
Standard Contribution Ex Tax (currency units, ex tax)Source: Calculated output
Segment Contribution Ex Tax
segmentContributionExTax = (segment price − variable cost − segment service cost) × segment units

Where

segmentPriceExTax
Segment price (currency units/target-segment unit, ex tax)Source: User decision
unitVariableCostExTax
Variable cost (currency units/product unit, ex tax)Source: Business record
segmentUnits
Segment units (whole target-segment units/comparison period)Source: User assumption
segmentServiceCostPerUnitExTax
Segment service cost (currency units/target-segment unit, ex tax)Source: Business record
segmentContributionExTax
Segment Contribution Ex Tax (currency units, ex tax)Source: Calculated output
Required Segment Units
requiredSegmentUnits = ceil(standard contribution ÷ positive segment contribution per unit)

Where

standardUnits
Standard units (whole standard-segment units/comparison period)Source: User assumption
segmentUnits
Segment units (whole target-segment units/comparison period)Source: User assumption
standardContributionExTax
Standard Contribution Ex Tax (currency units, ex tax)Source: Calculated output
segmentContributionExTax
Segment Contribution Ex Tax (currency units, ex tax)Source: Calculated output
requiredSegmentUnits
Required Segment Units (operational units)Source: Calculated output

Money inputs and outputs use the currency selected in the scenario without changing the canonical methodology. Rates, margins, utilisation and buffers are entered as percentages and converted to decimal values for calculation.

2. Worked example

Input assumptions

The worked rows below come directly from the registered engine and visible default fixture.

Calculation and outputs

Example

The worked rows below come directly from the registered engine and visible default fixture.

Contribution Delta Ex Tax
-4,000 currency units
Standard Contribution Ex Tax
25,000 currency units
Segment Contribution Ex Tax
21,000 currency units
Required Segment Units
715

The exact engine-derived outputs are shown in the labelled rows below.

Interpretation

The segment comparison exposes both price difference and incremental service cost per customer group.

3. Validation and boundary checks

  • All inputs must be finite and within the visible validation boundaries.
  • Rates use decimal values below 100%; whole-unit thresholds round upward only where the engine names that rule.
  • All compared monetary inputs use one consistent ex-tax basis and planning period.

4. Assumptions and source classification

  • Every cost, price, fee and volume is supplied by the user; no market benchmark is inferred.
  • Indirect tax is excluded from retained commercial economics unless a dedicated input explicitly models it.
  • The engine retains full precision and display formatting never feeds back into calculation.

This planner has no current policy-data dependency. Its commercial assumptions are user supplied. Registered family-level regression suites exercise the shared business-logic engine and worked-result reconciliation.

5. Limitations

  • The model does not forecast demand, competitor response, supplier negotiation outcomes or capacity.
  • It does not replace accounting, tax, legal or financial advice.

This is educational decision support, not tax, accounting, legal or financial advice. Check the treatment of your actual transactions under the rules that apply to your business and seek qualified advice where appropriate.

6. Update and evidence policy

Registered family-level suites test formula invariants and example reconciliation; the release ledger records that coverage without claiming a separate oracle for every line of public copy. There is no official threshold or benchmark to refresh for this planner. Commercial inputs remain user-supplied because they vary by business and contract.

Change history

  1. : Initial public release of the planner and methodology after pre-launch calculation, content, source and interaction review.

Related reading

Guides to interpret the decision and its assumptions.

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