Pricing Calculator for South African Businesses

A South African pricing calculator converts cost to shelf price including 15% VAT, payment-processor fees (typically 2.5-3.5% via Yoco, PayFast, Peach, or Stitch), and your target margin. The R1,000,000 rolling 12-month turnover threshold for compulsory VAT registration is the single biggest pricing inflection point. SARS' VAT 404 Guide for Vendors is the authoritative reference.

SA pricing has three structural features absent in UK or US frameworks. First, the headline VAT rate (15%) is materially lower than the UK's 20% but higher than the average US state sales tax — and unlike US sales tax, SA VAT is charged on services as well as goods, with very few exemptions. Second, the R1 million turnover threshold for VAT registration is a notorious pricing cliff: cross it for the first time and your effective margin on existing customers drops 13% overnight unless you reprice. Third, the cash-vs-credit landscape is bifurcated — informal sector pricing assumes cash and instant payment, while formal B2B pricing assumes 30-60 day Net terms and the working-capital cost that implies.

Step 1 — Cost to ex-VAT price: apply your target markup to VAT-exclusive cost. If you're VAT-registered, your supplier's invoice will include 15% input VAT that you'll claim back via the VAT201 return — work in ex-VAT figures throughout, because that's how SARS sees your turnover on the ITR14.

Step 2 — Ex-VAT to shelf price: add 15% VAT. For zero-rated goods (basic foodstuffs: maize meal, brown bread, milk, eggs, vegetable oil, rice, fresh fruit and vegetables; international transport of passengers and goods; exports) the VAT rate is 0% — but you still register and file. For exempt supplies (residential rental, educational services, public road and rail transport, financial services) you don't register and can't claim input VAT.

SA pricing conventions by sector (industry-typical): - Builders' merchants: 25-40% markup on materials - Independent fashion retail: 150-250% (lower than UK/US due to import duty stack) - Restaurants and bars: 60-200% on food, 250-400% on alcohol - Professional services: 200-400% on direct staff cost - Plumbing / electrical parts: 30-100% depending on trade or retail counter

Worked example: a Pretoria retailer sources a kettle at R180 ex-VAT from a Johannesburg distributor (R207 incl-VAT, R27 input VAT claimable). Target 45% gross margin means ex-VAT shelf price = R180 ÷ 0.55 = R327.27. Adding 15% VAT, the till receipt shows R376.36 — round to R379 for psychological pricing. Net of payment-processing 3%, the retailer banks R367.50, of which R49.06 is output VAT owed to SARS at the next VAT201 cycle, leaving R318.44 — a R138.44 (43.5%) gross margin on a R180 cost.

For underlying rules, SARS' VAT 404 Guide for Vendors and the Binding General Ruling collection on the SARS website are authoritative. Pair with /profit-margin-calculator/za for the downstream margin walk and /invoice-calculator/za for the VAT-compliant invoice format SARS requires.