Suppose you have already taken on work or sold goods several times as an individual. Customers say you are good, sales go up and down with the month, and you are thinking it is time to start a company. The question many people skip is this: after deducting everything, including your own time, how much does one sale really leave for the company?
This guide follows on from testing whether customers will really pay and comes before preparing funds before starting a company. We build a cost-per-sale worksheet that uses letters instead of numbers, so you can substitute your own figures, and we point out where law and tax change the result.
The core answer
A business that does not pay on a single sale will not pay better once it becomes a company. Incorporating adds recurring burdens; it does not add profit per unit. Start from the selling price, deduct direct costs, deduct the owner's time at the rate you would have to pay someone to do it, deduct acquisition cost, deduct rework and returns, deduct payment-collection fees, and see what is left before comparing it with fixed costs.
The rule (Thai law). Value added tax charged to customers (if registered) is collected on behalf of the state and is not revenue. Withholding tax deducted by a business customer reduces the cash received but is a tax credit for the seller. Section 65 ter of the Revenue Code lists prohibited expenses when computing net profit, and an expense must have the prescribed evidence before it can be deducted. A seller is liable for defects under section 472 of the Civil and Commercial Code, and a contractor is liable for defects in the work under sections 587 and 600, which are costs that can arise even if the contract says nothing.
Our practical view. Do not calculate only from the price you heard on the day the sale closed. Go back over the money that actually reached your account for the 3 to 5 most recent jobs, and note the time spent at every step. If the figure per sale is still too thin, fixing the price, the scope of work or the customer segment is usually cheaper than incorporating first and fixing it afterwards.
1. The cost-per-sale worksheet for one sale
Start with one sale, not a whole month. Choose the unit the customer actually pays for, such as one job, one order, one month of a contract or one course, and work down in this order.
| Step | Item | Meaning |
|---|---|---|
| 1 | Selling price before VAT (A, ก) | The price agreed with the customer, not counting tax collected on behalf of the state |
| 2 | Direct costs (B, ข) | Materials, goods, inbound freight, subcontracting, software used only for this job |
| 3 | Owner's time (C, ค) | Time spent on this job, valued at what you would have to pay someone to do it |
| 4 | Customer acquisition cost (D, ง) | Advertising, platform commission, time spent pitching, samples, first-time discounts |
| 5 | Rework and returns (E, จ) | Fixing work, product claims, refunds, an allowance for warranty |
| 6 | Payment-collection fees (F, ฉ) | Card or platform fees, transfer fees, and the cost of being paid late |
| 7 | Amount left per sale (G, ช) | A minus B minus C minus D minus E minus F |
The summary formula: G equals A minus (B plus C plus D plus E plus F). If G is negative, it means you lose more the more you sell once your own time is counted. If G is positive but very thin, the business is sensitive to small events, such as a customer asking for one round of changes or paying one month late.
This worksheet is different from choosing jobs in a business that is already running, which is explained in more work, less profit: which jobs to accept, and from choosing a pricing method in fixed, hourly and monthly pricing for services. This guide answers a question that comes before setting up the company: can one unit of sale support itself?
2. The owner's labour: the cost that always goes missing
Many people starting a business think their own time is not a cost, because no money goes out. But once the business grows and you have to hire someone to do the work, that labour becomes money you really pay. A workable method is to calculate C as the time spent multiplied by the hourly rate of a similarly skilled person whom you would have to hire if you did not do the work yourself.
Split the time into three groups: time spent on delivery, time spent selling and answering questions before agreement, and time spent after the sale, such as rework, chasing payment and paperwork. The second and third groups are the ones most often forgotten, and they often take no less time than the first.
Law and tax differ by business form. If you operate as an individual, money the owner takes is not a business expense, because the owner and the business are the same person. If you form a company, the company is a juristic person separate from its shareholders, and a director's salary or remuneration from the company is an expense of the company, with payroll duties, the recipient's tax and supporting documents following. The exact burden depends on how the payment is made and on the facts, so consult an accountant or tax adviser. For keeping accounts from the first year, see company bookkeeping in the first year.
A business observation: once the company has to pay you, the figure C you estimated in advance becomes a visible line in the accounts. If profit per sale goes negative after deducting C, the company cannot pay the owner in the long run.
3. Customer acquisition cost: count both money and time
Customer acquisition cost (D) is more than advertising. Walk through the channels recorded in the Lean Canvas and the Business Model Canvas.
- Advertising and platform fees. Commission, subscription fees, fees to have your listing ranked higher.
- Selling time. Answering chats, quoting, scheduling meetings, travelling to meet customers, valued as time in the same way as in section 2.
- Samples and first-time discounts. Freebies, free trials, sample work that is unpaid.
- Customers you did not close. The cost of the people who talked to you but did not buy must be counted together with those who did.
To find D per customer, take the total acquisition cost in a period and divide it by the number of new customers won in the same period. If each customer buys several times, spread D across the number of purchases actually made within the period for which you have data. Do not assume customers will buy again if you have not yet seen that behaviour.
If D is much higher than G, go back to choosing your first customer segment, because a segment that takes a long time to persuade is often the reason acquisition cost exceeds the price.
4. Rework, returns and the warranty the law imposes by itself
Cost E is not something you can choose to have or not. The law makes a seller liable for defects in the property sold (Civil and Commercial Code, section 472) even without a warranty card. For hire of work, the contractor is liable for defects in the work (section 587 and the sections that follow), and section 600 sets the rule on the period within which a defect must appear for the contractor to be liable, unless the contract provides otherwise; the result depends on the nature of the work and the facts.
In practice, estimate E from real data. Look at how many rounds of changes each recent job needed, how much time it took, and how many times materials had to be replaced or money refunded, then put the average per sale into the worksheet. If you have no data yet, set a cautious assumption and adjust it every month. State the scope of work, the number of revision rounds and the acceptance criteria in the quotation or contract so that rework does not become endless. For warranties on goods sold together with after-sales service, see the product-plus-after-sales-service model.
5. Payment-collection fees and the cost of being paid late
Cost F has two parts. The first is the fee charged by the card or platform before the money reaches you. The second is the cost of waiting for money: if business customers get long credit terms, you must fund working capital in advance yourself, which may be interest on borrowing or an opportunity lost. For cash cycles and speeding up collection, see profitable but short of cash. Here it is enough to put F in the worksheet, so you do not forget that the money received is not always the price agreed.
6. Costs people forget
The following are often outside direct costs but can eat into profit.
- Value added tax. If the business is registered, the tax collected from customers belongs to the state and should not be counted as revenue or as working money.
- Tax withheld by customers. It leaves you with less cash than the selling price, even though you get a tax credit later.
- Travel and freight, especially for work on site.
- Monthly or annual software subscriptions. Accounting systems, booking systems, design tools, cloud storage.
- Insurance, where the customer contract or the nature of the work requires it.
- Accounting, audit and tax filing fees, which arise once there is a company and have deadlines set by law. Details are in first-year costs after registering a company.
- Licence renewal fees for licences or registrations that must be renewed periodically.
- Depreciation. Equipment that must be replaced when it breaks or becomes obsolete.
For tax purposes, a company's expenses need correct supporting evidence before they can be treated as expenses, and section 65 ter of the Revenue Code lists several kinds of prohibited expenses, such as personal expenses and expenses not incurred for the business. Business owners should ask for receipts or tax invoices in the company's name and separate personal expenses from company expenses from the start. Whether any given item can be deducted must be checked by an accountant case by case.
7. From amount left per sale to break-even
Once you have G per sale, add up monthly fixed costs (H), which are expenses that arise even when there are no sales, such as rent, accounting fees, regular software, and insurance, and use the formula:
- Minimum sales per month equals H divided by G
If the minimum number of sales is higher than you can really deliver with the time you have, this cost structure is not yet suitable. Reduce H, increase A, or reduce D and E first.
A hypothetical example for illustration. Suppose a shop offers logo design for small businesses, selling one package at price A. The direct costs are software and fonts used only for the job (B). The owner spends several hours on each job, which counts as C. Acquisition cost comes from advertising and answering chats (D). Customers ask for an average of 2 rounds of changes, counted as E, and there is an online payment fee (F). When G is calculated, it turns out G is less than C. That means the owner is earning less than the labour rate they set. Before incorporating, they should adjust the price A, reduce the number of revision rounds, or find a channel with a lower D.
8. What this result changes in your decisions
| Result | Decision to consider |
|---|---|
| G is negative | Adjust the price, reduce the scope of work or change the customer segment. Do not incorporate yet |
| G is positive but thin | Keep selling in a form with low fixed costs; expand once D and E fall |
| G is good but D is very high | Go back and choose a different segment or channel; see choosing your first customer segment |
| G is good and the minimum number of sales is achievable | You may incorporate if other reasons support it, such as customers needing a juristic person, wanting to separate liability, or having several partners |
The reason to incorporate is usually not that profit per unit improves, but that a larger customer wants a juristic person as counterparty, or that you want to separate shareholders' liability from personal assets. If you are an online seller weighing this up, see when an online seller should move from an individual to a company, and for the funds to prepare once you have decided to incorporate, see what money to prepare before starting a company.
9. Collecting data so the numbers are trustworthy
Figures from memory are usually biased. Collect the following from your first sale.
- Note the time spent at every step of the job, from answering the chat to chasing payment.
- Keep every receipt and tax invoice, and separate personal expenses from business expenses.
- Record the money that actually reaches your account each time, compared with the agreed price, to see the effect of withholding tax and fees.
- Note how many rounds of changes each customer asked for and how many times they asked for a refund.
- Review the worksheet every month, and whenever costs or channels change.
Once you have an accounting system or a bookkeeper, ask for income and expense reports split by job or by customer; this will bring the per-sale figures closer to reality. See our accounting and tax service.
Checklist before deciding to start a company
- Choose one unit of sale that customers have actually paid for
- Use the selling price before VAT, not counting tax collected on behalf of the state
- Include all direct costs, including freight and subcontracting
- Include the owner's time at the rate you would have to pay someone to do it
- Count acquisition cost in both money and time, including customers you did not close
- Estimate rework, returns and warranty from real data
- Include payment-collection fees and the effect of tax withheld by customers
- Go through the commonly forgotten items, such as software, insurance, accounting and licences
- Calculate the minimum sales per month and compare it with what you can really deliver
- Consult an accountant about VAT, withholding tax and how to pay the owner's remuneration
Further reading
- Testing an idea before a large investment — to see evidence that customers really pay
- What money to prepare before starting a company — the next step once the per-sale figures pass
- More work, less profit — for choosing jobs in a business that is already running
- Fixed, hourly and monthly pricing for services — when you have to choose a pricing method
- First-year costs after registering a company — for registration fees and charges not repeated here
- Profitable but short of cash — for the cash cycle
Before you start a company, know what one sale leaves after counting your own time and the forgotten costs, because a company adds recurring burdens but does not by itself improve profit per unit.
We help check whether your business structure, sales documents and tax burden are ready for incorporation. For an initial consultation, call +66 92 254 2045 or send us the details. See also accounting and tax and company registration.
This guide is published by Suwanvara Law Firm — a Khon Kaen law firm established in 1986. General information only, not legal advice on a specific matter.
