Financial Models

Build a pricing model for a product or service

Get a clean, formula-driven pricing model: cost build-up, price at a target margin, volume tiers, breakeven and a sensitivity table, without hours of formatting.

Time
About 1 hour
Level
Intermediate
Works with
Claude, ChatGPT, Microsoft Copilot, Gemini

What you need

  • The cost build-up: materials, labor hours and rates, other direct costs
  • Overhead allocation rate and its basis
  • Target gross margin, and competitor price points if you have them
  • Expected volume tiers

Steps

  1. Gather your cost inputs into a simple list with sources.
  2. Paste the prompt. If your AI tool can create Excel files, ask it to build the workbook; otherwise ask for the layout and formulas cell by cell.
  3. Test the model with round numbers you can check by hand.
  4. Format the output tab for presentation and lock the formula cells.

The prompt

Fill in the highlighted brackets
Design a pricing model workbook for [product or service].

Inputs I have:
[paste cost build-up, overhead rate and basis, target margin, volume tiers, competitor prices]

Requirements:
- Tabs: Inputs, Cost Build-Up, Pricing, Volume Tiers, Sensitivity.
- Every assumption sits in its own labeled cell on the Inputs tab, and formulas reference those cells. No hardcoded numbers inside formulas.
- Compute fully loaded cost per unit, price at the target gross margin (price = cost / (1 - margin)), the equivalent markup, contribution margin per unit, and breakeven volume.
- Add a sensitivity table showing gross margin at price changes of -10% to +10% and volume changes of -20% to +20%.
- Explain the difference between margin and markup in one sentence on the Inputs tab.

If you can create an .xlsx file, build it. Otherwise give me the layout and the exact Excel formula for each cell, with cell references.

Review before you use it

  • Margin and markup aren't confused anywhere. A 40% margin is a 66.7% markup.
  • A hand calculation with round numbers matches the model.
  • The overhead allocation basis is reasonable and documented.
  • No numbers are typed into formulas; every input lives on the Inputs tab.

Never paste into an AI tool

  • Customer-specific contract pricing covered by confidentiality terms
  • Use a business or enterprise AI plan that does not train on your data, and follow your company's AI policy.

Educational content, not professional advice. AI output can be wrong; review it before relying on it. Disclaimer