Many small sellers pick a price by feel, and end up busy but broke. A simple method fixes that.
Direct answer
To price a product, work out the full cost of each unit (materials, time, packaging, fees, delivery and a share of overheads), decide the profit margin you need, check what similar products and your customers will pay, then set a price and test it. Price to cover costs and reflect the value you deliver, not just to match competitors.
Step 1: Find your real cost
| Cost | Examples |
|---|---|
| Direct | Materials, packaging, delivery |
| Your time | Hours × a fair hourly rate |
| Fees | Payment, platform, marketplace |
| Overheads | Rent, tools, marketing, spread across units |
Step 2: Choose a margin
Margin is the share of the price you keep as profit.
- Price = cost ÷ (1 − margin)
- Cost 6 and a 50% margin: 6 ÷ 0.5 = 12
Step 3: Check the market
- What do similar products cost?
- What is the next-best alternative for the customer?
- What is it worth to them? A saved hour or a nicer gift can justify a higher price.
Step 4: Set options
Offering good, better and best often lifts sales of the middle option.
Step 5: Test and adjust
- Try a price for a few weeks.
- Watch sales and feedback.
- Raise prices gradually and tell customers why when needed.
Mistakes
- Forgetting your time
- Competing only on being cheapest
- Ignoring fees
- Never revisiting prices
Services
See how to price your services and pricing strategies for small business.
Where Teyro fits
Teyro's How to Price a Product or Service course teaches what a sale really costs, what it is worth to customers, and how to set, test and raise prices without losing the people who matter. It has 50 short lessons and is free to start.
The bottom line
Know your costs, know your value and test.
