Who this is for: Managers
📋 Set Up Your Business Foundation — 3-Part Guide
- Part 1: Costs and Overhead — You are here
- Part 2: Labor Burden and Markup
- Part 3: Reading Your Numbers and Adjusting
💼 Why this matters
The Profit Allocation planner is the engine behind every estimate you build in PriceRight Pro. The numbers you enter here determine your real break-even rate — the minimum you need to charge, per job, to keep the lights on and pay yourself. Skip this setup and your estimates are built on guesswork. Complete it and every quote you send is backed by your actual costs.
Before you start, have a rough idea of:
- What you want to take home each month after taxes
- Your main monthly business expenses (rent, insurance, phone, fuel, software)
- Your average job or sale amount
- Your state of business
You don’t need exact figures. Realistic estimates are enough to get started — you can refine them any time.
The cost discovery exercise #
Before you open the planner, take two minutes to think through your actual costs. Most contractors underestimate overhead because they only count the obvious expenses. Use this as a mental checklist — anything that applies to your business should factor into your monthly total.
| Category | Common examples | Commonly missed |
|---|---|---|
| Facility | Office rent, storage unit, shop lease | ⚠️ Home office — the portion of your home used exclusively for business |
| Insurance | General liability, commercial auto | ⚠️ Workers’ comp, tools & equipment coverage |
| Vehicle | Truck payment, fuel, maintenance | ⚠️ Vehicle depreciation — most contractors never account for this |
| Marketing | Google ads, website hosting, business cards | ⚠️ Networking memberships, trade association dues |
| Software & subscriptions | Accounting software, communication tools | ⚠️ App subscriptions that auto-renew annually — divide by 12 |
| Communications | Business phone, internet | ⚠️ The business portion of a personal phone plan |
| Professional fees | Accountant, bookkeeper | ⚠️ Annual fees — divide by 12 to get monthly cost |
| Debt service | Equipment financing, business loans | ⚠️ Credit cards used for business purchases |
Add up everything that applies. That total is your monthly overhead — the floor your pricing needs to cover before you pay yourself a single dollar.
Open the Profit Allocation planner #
From the home screen, tap the YOUR PRICERIGHT FORMULA card, then tap Find Out My Number. The Profit Allocation screen opens.
ℹ️ Note: If you’ve already dismissed the prompt card, tap the Projections card in your Tools grid instead. That opens the same Profit Allocation screen.
Step 1 — Enter your salary goal #
In the Your Goal section, tap the Desired Monthly Take-Home field and enter the amount you want to pay yourself each month after all business costs and taxes are covered. This is the number the entire formula is built around.
Below that, tap Current Average Monthly Gross (Optional) and enter what your business is currently bringing in. This is optional — but if you enter it, the results screen will show you a Current / Target / Gap comparison so you can see exactly how far your current revenue is from where it needs to be.
⚠️ A note on your salary number
Enter what you actually need — not what feels modest or ambitious. If you undershoot your salary target here, every estimate you build will be priced for a business that can’t actually support your life. The formula only works if the inputs are real.
Step 2 — Enter your average sale amount #
In the Average Sale Value section, tap Average Sale or Job Amount and enter a rough average of what a typical job or sale brings in. The planner uses this to calculate how many sales you need per month and per week to hit your target gross. You’ll see this in the Sales Target section once results appear.
Step 3 — Add debt service if applicable #
In the Monthly Debt Service section, tap Total Monthly Debt Payments (Optional) and enter your total fixed monthly loan, equipment financing, and credit payments. If your business carries no debt, leave this blank.
Debt service is handled separately from operating costs because it’s a fixed obligation — not a percentage of revenue. The planner adds it directly to your required gross target.
Step 4 — Set your tax settings #
In the Tax Settings section, select your tax year, your filing status, and tap Select State to choose your state. The planner uses these to auto-calculate your Tax Reserve — the percentage of gross revenue you need to set aside each month so your quarterly and annual tax bills are never a surprise.
Step 5 — Review the Allocation Percentages #
The Allocation Percentages section shows five sliders — the five buckets that every dollar of gross revenue is divided into before you pay yourself. The defaults are benchmarks for a lean, healthy business. Review each one and adjust if your situation is different.
- Operating Costs — your cap for all overhead (rent, marketing, software, phone, insurance). The industry benchmark is 30%. If a single expense would push you over this number, you can’t afford it yet.
- Upgrade & Replacement Fund — set aside for equipment, vehicles, and tools. Benchmark: 5%. This is the money that keeps a broken-down truck from becoming a financial emergency.
- Business Savings — your emergency cushion. Benchmark: 5%. Covers slow months without ever touching your personal account.
- Tax Reserve — auto-calculated from your Tax Settings. Keep this in a separate account so it’s never accidentally spent.
- Your Take-Home Salary — what’s left after the other four buckets are funded. In The PriceRight Formula, this is designed to be enough — not whatever happens to remain.
Adjust the sliders to match where your business is today. Your required gross revenue and take-home salary update in real time as you move them.
When you’re done: The Required Gross Revenue section appears at the bottom of the screen showing your monthly and annual gross target — the number your business needs to generate for your salary, overhead, savings, and taxes to all be covered. Tap Done in the top-right corner when you’re finished.
💡 Tip: Tap Interpret My Numbers at the bottom of the results screen for an AI-powered plain-English explanation of what your numbers mean and whether your allocation is healthy for your business size. It’s free on all tiers.
🗂️ Tax Checkpoint
The overhead categories you identified in the discovery exercise above are business deductions — every one of them reduces your taxable income at year-end. The Tax Reserve bucket ensures you’re setting aside the right amount monthly so those quarterly IRS payments aren’t a surprise. See Tax Planning: Set Up Quarterly Estimates → for the full picture.
✅ You’re done with Part 1.
Your overhead and cost inputs are set. Your required gross revenue target is calculated. Part 2 covers labor burden — what it actually costs your business to put a worker on a job — and how that feeds into your markup.
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