Pricing Is a Business Calculation, Not a Guess
Pricing Is a Business Calculation, Not a Guess
One of the biggest problems in small product businesses is pricing that looks right on the surface but doesn’t actually work underneath.
A lot of people price like this, take the cost of ingredients, multiply by two for wholesale, and by four for retail. It sounds neat, it’s easy to remember, and it feels “businessy”. But it isn’t real pricing. It’s a shortcut that ignores most of the costs involved in actually running a business.
Ingredients are only a small part of what it takes to produce and sell a product. There’s packaging, labels, electricity, water, equipment, website fees, card charges, tools, time, admin, marketing, and problem solving. All of that is part of the product, whether it feels like it or not.
Then there’s labour.
So many people leave themselves out of the numbers. They count everything except their own time, as if their hours don’t have a value. But time is the most expensive part of any business. You can reorder ingredients. You can replace packaging. You cannot replace hours.
If your price doesn’t include a wage, you are not running a business. You are donating your time to it. Knowing your worth means recognising that your time, skills, and effort have a real monetary value not just emotional value.
No one would go and work in a supermarket, work all month, and accept not being paid at the end. But many small business owners do exactly that to themselves without even realising it.
Wholesale pricing is where weak pricing shows itself the fastest. If your wholesale price is just “cost x 2”, there is usually no space left for anything else. No space for mistakes. No space for slow periods. No space for growth. And definitely no space for discounts.
Yet people then run sales at 10%, 20% or 25% off the wholesale prices. At that point, the business often isn’t making less, it’s making nothing. Sometimes it’s losing money on every order.
If your pricing can’t handle a sale without putting you into a loss, then the pricing was never strong enough to begin with.
Real pricing has to account for what the product costs to make, what it costs to run the business, what it costs in time and labour, and what it needs to grow. Only then do you know what a product actually needs to be priced at.
Good pricing isn’t about being expensive. It’s about being accurate. And knowing your worth is part of being accurate, because your work is part of the product.
Accurate pricing changes everything. It means you’re not relying on volume just to survive. It means each sale contributes to stability. It means growth is possible without exhaustion.
A serious business is one that can pay its owner, cover its costs, and invest in its future.
Anything else is just busy.
And busy without being paid is not success.
This is also why guessing prices or relying on simple formulas like “cost x 2” or “cost x 4” causes so many problems. Without seeing the full picture, you’re making decisions with missing information.
If you want to price properly, you need to see everything not just ingredients, but time, utilities, tools, packaging, running costs, and the reality of what it takes to operate.
One of the best tools I’ve seen for this is a cost calculator created by Richard. It’s built to factor in the real costs of running a product business, not just the obvious ones. It helps you see what your products actually need to be priced at if you want to pay yourself, stay afloat, and grow.
Because knowing your worth isn’t just about confidence, it’s about having numbers that support it.
And when your pricing supports your time, your costs, and your future, you stop guessing.
You start running a business.
To get Richards amazing cost calculator click the link below
Product Cost and Pricing Calculator (Excel Download) – The Aroma Pixies