How to Price Your Product or Service

Price is not a guess, it is a job

A price has three jobs. It has to cover what the thing cost you to make or deliver, it has to pay you for your time, and it has to leave something left over. That leftover is profit, and profit is the whole point of a business.

If your price only covers cost, you have a very expensive hobby. If it covers cost and your time but nothing more, you have a job that fired your boss and gave you all the stress. You want all three.

Learn the words: revenue, cost, and profit

Revenue is the money that comes in from sales, before anything is taken out. If you sell 100 candles at 20 dollars each, your revenue is 2,000 dollars.

Cost is what you spend to make and sell the thing: wax, wick, jar, label, the fee the card processor takes. Profit is what is left after you subtract cost from revenue. Revenue minus cost equals profit. That is the whole sentence.

Three honest ways to reach a number

Cost-plus: add up what one unit costs you, then add the amount you want to keep. Costs 8 dollars to make, you want to keep 12, so you charge 20.

Market-based: look at what similar sellers charge and decide where you sit inside that range and why. Value-based: price on the result you deliver, not the hours you spent. A logo that helps a shop look legit is worth more than the two hours it took.

Most strong prices use all three: cost sets the floor, the market sets the range, and value tells you where in that range you belong.

Do not forget the fees that eat your price

When someone pays you 20 dollars by card, you do not keep 20. A processor usually takes a small percentage plus a flat few cents per sale. On a 20 dollar sale that might be roughly 88 cents, so you keep about 19.12.

That gap feels tiny on one sale and real across a thousand. Build it into your cost before you set the price, not after you are surprised by it.

Add up the true cost of one unit

Take a candle as the example. Wax 3 dollars, wick and jar 2, label and box 1, card fee about 1. That is 7 dollars in direct cost to make and sell one candle.

Direct cost is only the money tied to that one unit. It does not yet include your rent, your website, or your time. Get this number honest first, because everything else stacks on top of it.

Pay yourself inside the cost, not after

Say each candle takes 15 minutes of your hands: pouring, labeling, packing. If you value your time at 24 dollars an hour, 15 minutes is 6 dollars of labor.

Add that 6 to the 7 in materials and fees and one candle now costs you 13 dollars all in. People skip their own labor and call the rest profit. That is not profit, that is unpaid work wearing a costume.

Add the margin you actually want to keep

You want to keep money above your full 13 dollar cost. Decide the price so the leftover is real. Price it at 26 dollars and you keep 13 above cost. Price it at 20 and you keep 7.

A quick way to check: profit divided by price. At 26 dollars, that is 13 divided by 26, which is 50 percent margin. At 20 dollars it is 7 divided by 20, which is 35 percent. Now you can compare choices instead of guessing.

The mistakes that quietly sink a price

Forgetting your own time is the big one, and forgetting fees is close behind. Both make a losing price look like a winner.

Pricing off a competitor without knowing their costs is another trap. Their 15 dollar price might work because they buy wax by the pallet and you buy it by the pound. Copy the number and you copy a loss.

The pricing and profit calculators at /calculators will run this same math for you, but do it by hand once so you trust the result.

Round to a price a human will pay

Math gives you 24.70 sometimes. Humans buy 25. Round to a clean, confident number rather than an odd one that looks like you were nervous.

Just make sure the rounding goes up to protect your margin, not down to protect a stranger's feelings.

Move from cost-plus to value-based

Cost-plus sets a floor so you never lose money. But it caps you at the floor if you stop there, because it ties your price to your effort instead of the buyer's result.

Value-based pricing asks a different question: what is this worth to the person buying it? A bookkeeping cleanup that takes you six hours might save a client a 900 dollar penalty and hours of panic. Priced on your hours it is 300 dollars. Priced on the result it is 600, and the client still feels they won.

Give people a choice of yes, not just yes or no

One price is a yes-or-no decision. Three tiers turn it into which one. Offer a basic, a middle, and a premium, and most people reach for the middle, which is exactly where you can put your best margin.

Example: 20 dollar basic candle, 34 dollar gift set, 60 dollar bundle. The bundle also makes the gift set look reasonable. That is anchoring: a higher option resets what the buyer thinks is normal. You can sketch tiers like these in the offer builder at /offer-builder.

Test a price change on a slice first

You do not have to bet the whole business on a new price. Raise it for new customers only, or on one product line, and watch what happens to sales and to what you keep.

Here is the math that surprises people. If you sell 100 units at 20 dollars with 7 dollars profit each, you keep 700. Raise to 24 dollars and even if you lose a quarter of buyers, 75 units at 11 dollars profit is 825. Fewer sales, more money kept, less work.

Protect margin when your costs move

Costs drift up quietly. Wax gets pricier, shipping climbs, the processor changes its rate. If your price stands still while costs rise, your margin melts and you will not feel it until the year looks thin.

Set a habit: review your unit cost and margin on a schedule, maybe every quarter. When cost rises, your price is allowed to rise with it. That is not greed, that is staying in business.

Know your walk-away price

Every seller needs a number below which the answer is no. That is your floor, the price that covers full cost and the minimum profit worth your time.

When a customer pushes for a discount, you can bend toward the floor with your eyes open instead of caving in the moment. A price you can defend is a price you can hold.