To price a product or service, start by calculating your full cost per unit (materials, labour, delivery, platform fees and a share of overheads), then set a price that covers that cost with a healthy margin and matches the value customers see in what you offer. Check it against competitors, but do not simply copy the cheapest one. Most small businesses underprice. Offering a good, better and best option, and raising prices a little at a time while watching sales, is safer than guessing one “perfect” number.
- Know your true cost per sale before you think about price.
- Cost-plus pricing protects you. Value-based pricing grows you.
- Competing only on price is a race you usually lose to bigger players.
- Three options (basic, standard, premium) make the middle one feel like a smart choice.
- Test your pricing ideas with the free AI Business Growth Consultant.
The busiest freelancer who was always broke
Imagine a graphic designer in Rajshahi. Let’s call him Arif. He has more work than he can handle: logos, social media posts, banners. He works until 2 am most nights. And at the end of every month, he is still worried about rent.
When he finally adds up his numbers, the problem is obvious. He charges 1,500 taka for a logo that takes him about 8 hours including revisions. That is less than 200 taka an hour, before internet, software and electricity. He priced himself by looking at the cheapest sellers on a marketplace, not by looking at his own costs or the value a logo creates for a business.
Busy is not the same as profitable. Good pricing is how you make sure the work you do actually pays you.
Step 1: Work out your real cost per sale
| Cost | Example (one handmade bag) |
|---|---|
| Materials | 420 taka |
| Labour (2 hours at 150 taka) | 300 taka |
| Packaging | 40 taka |
| Payment or platform fees | 30 taka |
| Share of overheads (rent, internet, ads) per bag | 110 taka |
| Total cost per bag | 900 taka |
Overheads are the costs people forget. Add up your monthly fixed costs and divide by how many units you sell in a typical month. That gives a fair share per unit.
Step 2: Choose a pricing method
For most small businesses, a blend works best: cost-plus sets your floor, competitors show you the range, and value tells you where in that range you belong.
Markup vs margin (they are not the same)
Markup is profit as a percentage of cost. Margin is profit as a percentage of price. A bag that costs 900 and sells for 1,440 has a 60% markup but a 37.5% margin. Mixing these up is one of the most common pricing mistakes, because it makes you think you are earning more than you are.
| Markup on cost | Resulting margin |
|---|---|
| 25% | 20% |
| 50% | 33.3% |
| 100% | 50% |
| 150% | 60% |
Step 3: Build simple price tiers
Instead of one price, offer three. For Arif the designer:
- Basic logo: 2 concepts, 2 revisions, PNG files.
- Standard brand kit: 3 concepts, unlimited small revisions, logo variations, colour palette, social media profile sizes. (Most popular.)
- Premium brand pack: everything in Standard plus business card, letterhead and a one-page brand guide.
The premium option makes the standard look reasonable, and the basic option keeps price-sensitive buyers from leaving altogether.
Step 4: Use pricing psychology carefully
- Charm prices such as 1,490 instead of 1,500 can make a price feel lower for everyday products.
- Round prices such as 15,000 often feel more premium for services.
- Bundles increase order value: buy the bag with a matching wallet and save 10%.
- Anchoring: show the higher option or the original price first.
Step 5: Raise prices without losing customers
- Add value firstBetter packaging, faster delivery, a small extra. It makes the new price easier to accept.
- Start with new customersKeep existing customers on old prices for a short time as a thank you.
- Announce it simplyGive notice, explain briefly (costs went up, quality went up) and do not over-apologise.
- Watch the numbersIf sales drop slightly but profit rises, the increase worked.
Signs your prices are too low
- You are fully booked but still short of money.
- Almost nobody ever questions your price.
- You attract customers who haggle hard and leave bad reviews.
- You cannot afford ads, tools or help, so you never grow.
Check your numbers
Before changing prices, calculate your break-even point with our profit margin and break-even guide. If you sell abroad, use the free currency converter to set fair prices in other currencies. For a pricing review tailored to your business, ask the free AI Business Growth Consultant.
Sources
Frequently asked questions
How do I calculate the price of my product?
Add up materials, labour, packaging, fees and a share of overheads to get your cost per unit, then add a markup that gives a healthy margin. Check the result against competitors and the value customers see.
What is the difference between markup and margin?
Markup is profit as a percentage of cost. Margin is profit as a percentage of the selling price. A 100% markup equals a 50% margin.
What is value-based pricing?
Value-based pricing sets the price based on the benefit the customer gets, not only on your cost. It usually allows higher prices for services and specialised products.
Should I be the cheapest in my market?
Usually not. Larger competitors can almost always go lower. Compete on quality, service, speed or specialisation instead.
How do I raise prices without losing customers?
Add a little value, give notice, start with new customers, explain briefly and watch whether total profit rises even if sales dip slightly.
Answer a few questions about your business and get a practical growth plan you can start this week.
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