A neighborhood store adjusts a product’s price because the competitor around the corner lowered theirs yesterday. A distributor sets the margin for an entire batch using the same percentage it has applied for five years, without checking whether costs have changed. A small manufacturer decides the price of a new item in five minutes, between answering the phone and signing an invoice. On its own, each of these situations may seem like a minor operational detail at a small business. Multiplied across the segment it represents, it becomes something else entirely.
Micro and small businesses account for 30% of Brazil’s GDP, generate up to R$3 trillion in annual revenue, and provide 78% of the country’s jobs, according to Sebrae data cited in Edson Clementino da Silva’s master’s thesis, defended at FIPECAFI in 2023. When a pricing error is repeated across product after product within this group, it stops being a management issue at a single company and starts affecting the income of nearly 8 in 10 workers nationwide. This is not rhetorical exaggeration—it is a matter of scale.
What these businesses’ share of GDP has in common is not their industry, exact size, or region. It is how the pricing decision reaches the owner.
Who Actually Sets the Price
Edson Clementino's study surveyed 70 small business managers across 17 industries to find out who actually makes day-to-day pricing decisions. The result: in 82.86% of cases, it is the owner. Not the finance department, a pricing analyst, or a committee. The owner alone, on top of the other fifteen roles they also perform.
That, in itself, is not the problem. In a company with only a few employees, it is expected—and even healthy—for the person taking on the business risk to also make the final pricing decision. The problem arises when this concentration of power is not supported by any process: the decision is made in a single act, with no steps, no checks, and no consistent method applied from one product to the next.
The same study reveals another finding that helps explain why this persists: 61.43% of the managers surveyed say they have only moderate familiarity with spreadsheets, and the sample spans 19 different educational backgrounds—most unrelated to finance or business administration. The owner makes the decision because the responsibility is theirs. But they often do so without the tool needed to make that decision repeatable.
What Changes When You Have a Calculation Tool
Clementino tested this exact variable in a laboratory setting. Seventy managers completed the same pricing exercise, divided into three groups with different levels of information available:
- one group received only the product price and the market price;
- a second group also received information on fixed and variable costs and expenses;
- a third group received all of this, plus a spreadsheet for calculations and simulations.
The technically correct price in the exercise was R$263.29. The group with access to the spreadsheet arrived at R$266.22, with a standard deviation of R$3.93—the closest distribution to the correct value among the three groups, as well as the most consistent.
The study’s counterintuitive finding is that simply seeing the cost did not improve pricing accuracy. The group given cost and expense data but no calculation tool did not perform significantly better than the group that only had the market price. What set the third group apart from the other two was not the amount of data available—it was having a method to structure that data into a calculation.
This reframes the challenge facing Brazilian small businesses. Most of them do not lack cost information: owners know, even if only off the top of their heads, how much the products they sell cost. What they lack is a tool that consistently turns that standalone figure into a price, from one product to the next and from one month to the next.
Where the Calculation Most Often Goes Wrong
A common source of error when calculating without a dedicated tool is confusing markup with margin. Both describe the same relationship between cost and price, but use different bases, and the gap between them increases as the percentage rises.
Cost-based markup uses the formula price = cost × (1 + markup). Sales margin uses price = cost ÷ (1 − margin). A product that costs R$ 50 with a 35% markup is priced at R$ 67.50. The same product, with a cost of R$ 50 and a 35% margin on the selling price, is priced at R$ 76.92. That is a difference of R$ 9.42 on a single item, despite applying the same percentage with the same goal—simply because a different formula was used.
Across the volume of items in a distributor’s or retailer’s catalog, this kind of confusion can distort the business’s revenue and actual margin without anyone realizing why, because the symptom—“the margin isn’t what I expected”—does not reveal the cause on its own.
Why This Is a National Problem, Not Just a Business One
When a company misprices a product, it loses margin on that product. When the same mistake is repeated across a segment that accounts for nearly one-third of Brazil’s economic output and four out of every five jobs, the impact is no longer isolated. It adds up to less working capital available to hire, invest, or weather a difficult month—across a group of businesses that collectively supports most of the country’s workforce.
This is not about poor individual decisions. It is about the lack of a process that few small businesses currently have the resources to build on their own: clearly defined steps, a consistent method, and a tool that applies that method without relying on the memory of someone in a hurry. To better understand how this concentration of decision-making works in practice, read the owner sets the price: what this means for small businesses. To test the difference between markup and margin on an actual product, use REVEMA’s selling price calculator.
The size of the segment is not just a statistic to open an article. It is why a pricing error that seems small in a single business becomes a nationwide problem when multiplied across the companies that generate nearly 30% of GDP and set prices the same way—one at a time, in the dark.
