A good price covers your costs, leaves you a profit, and still feels fair to the customer. If the price is too low, you work hard and earn little. If it is too high, people will not buy. This guide shows a simple way to set a price, in plain words.
Start With Your True Cost
Before you pick a price, add up everything one item costs you. Not just the product cost. Add the product, packaging, delivery, platform or payment fees, and a share of returns.
Example: a product costs $20. Packaging costs $2. Delivery costs $5. Fees cost $3. Your true cost is $30. If you sell it for $30, you earn nothing. You must sell it for more than $30. See our guide on the hidden costs of running an online store to check each cost, one by one.
Add a Fair Profit
After the true cost, add your profit. A simple start is to add 20% to 30% on top of the true cost. Using the example above: true cost $30, plus 20% ($6) = $36. That $6 is your profit before tax and before your time.
Your profit must also cover your time. If you spend one hour making or packing each item, that hour has a value. Do not forget it, or you will be busy and still broke.
Check What Others Charge
Look at 3 or 4 shops that sell something like yours. Write down their prices. You do not need to copy them. But if everyone else sells for $40 and you sell for $60, you must explain why yours is worth more — better quality, faster delivery, or better help after the sale.
If your price is much lower than everyone else, check your costs again. A very low price often means you forgot a cost, like delivery or fees.
Test One Price, Then Wait
Do not change your price every day. Pick one price, use it for 2 or 3 weeks, and watch what happens. How many people buy? How many ask about the price and then leave? How much profit is left at the end of the month?
If almost nobody buys, the price may be too high, or people may not understand why it costs that much. Explain the value in plain words on the product page. If many people buy and you sell out fast, the price may be too low — you can try a small rise next time
Common Pricing Mistakes
First, forgetting delivery and fees. Second, copying a big shop's price when your costs are different. Third, giving a big discount on every sale — a discount that loses money on every order does not help, even if sales go up. Fourth, keeping the same price for years while your costs rise. Check your prices once every few months. For more ways to earn more without a big price rise, see our guide on how to increase profits without raising prices.
FAQ: Pricing for a Small Business
How do I know if my price is too high?
If many people look but very few buy, and they buy the same thing cheaper elsewhere, your price may be too high — or your value may not be clear. Ask a few customers what they think the product is worth.
Should I offer a discount to get my first customers?
A small discount for the first few customers is fine, if it still covers your costs. Do not give a big discount for a long time. For how to find those first buyers, see our guide on how to get your first 100 customers for a small business.
Should I charge the same price everywhere?
Not always. Delivery costs and fees can be different on different places where you sell. Work out the true cost for each place, and set the price so you still make a profit there
