Price and Cost Calculation for Starting a Business in Georgia

For the baseline scenario, the Georgian lari is a suitable accounting currency, while prices should be clearly stated as either inclusive or exclusive of VAT. Whether VAT applies and how any input VAT deduction may affect the calculation must be assessed by scenario; it should not be included as a cost without clarification. Depending on the offering, variable costs include goods or raw materials, packaging, delivery, customs and imports, payment fees, platform commissions, sales-related labor, returns, warranties, and support. Fixed costs may include rent and a deposit, fit-out, equipment and depreciation, licenses, accounting, software, telecommunications, core staff, insurance, and an ongoing marketing budget. The contribution margin per unit is the net revenue minus all variable costs. The contribution margin ratio is the contribution margin divided by net revenue, while the calculated break-even quantity is fixed costs divided by the contribution margin per unit. A separate cash-flow break-even calculation also accounts for initial investments, inventory, payment terms, and VAT. The founder’s salary, taxes, reserves, and capital tied up in ongoing operations must not be omitted from the plan. When costs are in a foreign currency and revenue is in GEL, exchange-rate risks arise; the relevant calculation rate is the actual rate applied by the bank or payment service, including its markup and fee—not just a reference rate from the National Bank of Georgia. Import prices, logistics, customs, delivery times, regional differences in rent and wages, seasonal demand, and the share of cash and card payments can further change the cost structure. Sales volume, price, discounts, payment defaults, exchange rates, wages, rent, import costs, and payment terms should be varied across an unfavorable, expected, and favorable scenario. A rolling 13-week cash-flow forecast highlights short-term shortfalls; a forecast covering at least twelve months captures seasonal and longer-term pressures. Tax classifications such as Individual Entrepreneur, Limited Liability Company, Micro Business, or Small Business should be assessed separately from pricing logic and do not replace a complete cost calculation.