Pricing is one part of business that new business owners tend to get wrong. You’ve found a great idea, you know people will buy from you, how you set your prices is what will make or break your business, whether you like it or not. Here are two rules of thumb to help you get it right.
1. Account for Every Single Cost
Whether you manufactured the product yourself or not, you need to factor in everything it took to get it into your hands and then into your customer’s hands. Let’s break it down using perfumes as an example:
- The cost of the perfume itself
- The logistics involved in getting the perfume to you
A lot of people stop right here and price their product based on just these two things. That’s where the mistake happens. You need to go further and include everything else that goes into the process:
- Packaging
- The money spent on advertising the product, along with any other variable costs
- The time you spent coordinating all of this (your time is worth something too!)
Once you’ve added all of that up, here’s a simple formula to work with:
Cost price + profit margin = your selling price
Do the math, weigh it against what your customers can realistically afford, and that brings us to the next rule.
2. Understand Your Customers’ Buying Power
Every group of buyers has a “sweet spot,” a price they’re comfortable paying, and your job is to find it.
One easy way to do this is by checking what your competitors are charging. Chances are, they’ve been serving these same customers for a while and have already figured out a price that appeals to them while still making a profit.
But what if you do all this and sales still aren’t coming in? Then it might be time to consider a different type of customer altogether, one whose buying power actually matches what you’re offering.
For example, if you notice that selling affordable perfumes isn’t bringing in the sales you expected, you could shift your focus to high-end buyers instead. Just know that this comes with its own demands: better packaging, a stronger brand feel, and everything else needed to appeal to a more premium audience.
Remember: There’s No Such Thing as “Too Expensive” for the Right Buyer
No product is ever inherently overpriced. Take a Hermès bag, for instance. Some of them sell for millions of dollars, and yet people still buy them without blinking.
Why? Perception.
It plays a massive role in pricing. So as you’re setting your prices, ask yourself one honest question: “Why would this buyer choose to pay this price for my product instead of buying it elsewhere?” If you can answer that clearly, you’re already on the right track.
A Simple Exercise to Try
Here’s something you can do right now. Send this prompt to your favourite AI tool:
“I am selling [product] to [target customers]. Here’s my cost of [production/business]. What prices do my competitors offer, and how can I build a better perception to sell better?”
It’s a quick way to get a clearer, more objective view of where your pricing actually stands, and what you can do to improve it.
Read: How to Stop Losing Sleep and Still Make Sales
Let Stores Help You Keep Track of It All
Getting your pricing right is one thing, managing and tracking sales is another. On Stores, you can set your cost price, selling price, and even discount price for every product, so you always know your real profit margin at a glance.
And when it’s time to run that seasonal sale, adjusting your discount price takes seconds, not recalculating everything from scratch. Your dashboard also shows you exactly how each product is performing, so you can tell which prices are fine and which ones might need a second look.
Ready to price with confidence and actually see the numbers behind it? Create your store on Stores.
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