Why Pricing Matters More Than You Think
Let’s be real, figuring out how to price your products can feel like a guessing game. Charge too little, and you’re burning yourself out for pennies. Charge too much, and you worry no one will buy. But here’s the thing: your pricing should reflect the value of your work, your time, and your expertise.
If you’ve been stressing over how to price your products without undercharging or scaring people away, this guide will walk you through a simple, confidence-boosting pricing strategy.
Step 1: Calculate Your Costs (So You’re Not Losing Money!)
Before we even think about profit, we need to know how much it actually costs to make our product or provide our service. Here’s what to include:
✨ Material Costs: Every single supply that goes into your product (e.g., wax, fragrance oils, wicks, containers for candles).
✨ Labor Costs: Your time is valuable! A lot of small business owners forget to account for their time, unfortunately. Track how long it takes to make each product and pay yourself an hourly wage. I add an extra 10-15%.
✨ Overhead Costs: These are ongoing expenses like rent, website fees, packaging, utilities, and tools.
✨ Shipping & Transaction Fees: Platforms like Shopify and Etsy take a cut, and shipping isn’t free. Include these in your pricing!
✨ For Service-Based Businesses: Include research time, client communication, software, and any tools needed to perform your service.
💡 Pro Tip: I use Inventora to help me calculate costs & keep track of inventory (They have a free version BTW, you just can’t connect it to your Shopify or Etsy like in the paid version). Click here to check it out!
Step 2: Use a Profitable Pricing Formula
Now that you know your costs, let’s make sure you’re actually making a profit. Here’s a simple but effective pricing formula:
Pricing for Handmade Products:
Wholesale Price = (Materials + Labor + Overhead) x 2
Retail Price = Wholesale Price x 2 (or 2.5)
✨Example: If it costs you $5 to make a product:
Wholesale Price = $5 x 2 = $10
Retail Price = $10 x 2.5 = $25
Why does wholesale matter? Even if you don’t sell wholesale now, this formula ensures your pricing is scalable if you ever decide to. Faire is a good site for selling wholesale.
Pricing for Service-Based Businesses:
For services, pricing isn’t about materials, it’s about your time, expertise, and value. Here’s how to calculate a profitable rate:
Step 1: Set a Base Hourly Rate
✨ Decide how much you need to make per hour to cover expenses and earn a profit.
✨ Consider your experience level; newer businesses may start lower, but experience justifies higher rates.
Step 2: Price Based on Value, Not Just Time
✨ Instead of charging hourly, create flat-rate packages based on the value of the outcome.
✨ Example: A branding package might take 10 hours, but the transformation it provides is worth much more than an hourly rate.
💡 Bestie Tip: If you price too low, you’ll attract bargain shoppers instead of clients who value your expertise.
Step 3: Check Competitor Pricing
While you should never base your prices purely on competitors, it helps to see where you stand in the market.
✨ Look at similar businesses and see what they charge
✨ Compare quality, materials, and customer experience
✨ Decide where you want to position yourself (luxury, mid-range, budget-friendly?)
Reminder: Being the cheapest option isn’t always the best option! It’s a fast track to burnout and can make your product be perceived as of lower quality. Price for profit, not just to beat competitors.
Step 4: Overcome Pricing Anxiety & Charge With Confidence
Feeling nervous about charging what you’re worth? Here’s how to shift your mindset:
✨ People pay for quality – If they want cheap, they’ll go to a big-box store.
✨ Your work is valuable – If you underprice, customers will question the quality.
✨ Pricing higher attracts better customers – People who appreciate handmade, high-quality work don’t haggle!
💡 Script for Pricing Confidence: When someone asks about your prices, say:
“My candles are $25 each because I use high-quality, clean-burning ingredients and hand-pour every batch to ensure the best experience for you.”
You don’t need to justify your pricing. Know your worth and state it with confidence!
Step 5: Test, Adjust, & Keep Growing
Pricing isn’t set in stone. If you’re constantly selling out, and you’re burnt out, it might be time for a price increase. If sales are slow, consider adding more value instead of just lowering prices.
✨ Try offering bundles or limited-edition products
✨ Experiment with small price increases and track customer response
✨ Focus on building a loyal customer base that loves your work
Final Thoughts: You Deserve to Get Paid!
Your products aren’t just “things”—they’re a result of your time, skill, and creativity. Price them in a way that honors that.
Now that you’ve nailed pricing, check out my other posts on starting a small business here! Get ready for a post on how to sell more without feeling salesy! (COMING SOON)
You got this, bestie!
PIN IT
