Start with your floor: the cost-based price
Your floor is the lowest price at which a sale still contributes to profit. Add up every cost of delivering one unit — materials, packaging, payment fees, shipping and the labour time it takes — and then add your target margin using Price = Cost ÷ (1 − margin). The margin calculator does this instantly.
For services, cost is mostly time. Work out your billable hourly cost: your desired annual pay plus overheads, divided by the hours you can realistically bill (often 1,000–1,400 a year once admin, sales and holidays are included).
Then find your ceiling: value-based pricing
Customers don't care about your costs; they care about what the result is worth to them. A bookkeeping service that saves a client 10 hours a month and avoids tax penalties is worth more than the hours it takes. Ask customers what problem they're solving, what it costs them today, and what alternatives they've considered. The answers tell you where your ceiling is.
Check the market: competitive positioning
Look at what competitors charge, but use it as context, not a rule. Decide whether you're the budget option, the mainstream choice or the premium specialist, and price consistently with that position. Competing on price alone is a race most small businesses lose to larger competitors.
Five pricing tactics that work for small businesses
- Good-better-best tiers. Three options let customers choose their own level; many pick the middle one, which you can design as your most profitable.
- Packages over hourly rates. Fixed-price packages reward efficiency and are easier for customers to say yes to.
- Minimum order or project size. Small jobs often cost as much to sell and administer as large ones.
- Recurring plans. Monthly maintenance, memberships or subscriptions smooth cash flow.
- Charm and anchor pricing. Show the premium option first so the main option feels reasonable.
How to raise prices without losing good customers
- Raise prices for new customers first; existing customers later with notice.
- Give 30 days' notice and explain what's improved or what costs have risen.
- Pair the increase with added value — faster turnaround, a bonus, or a loyalty rate for annual prepay.
- Expect to lose a few price-sensitive customers. If profit rises, that's a good trade.
Check the plan
After setting a price, confirm how many sales you need with the break-even calculator. If the number is out of reach, revisit cost, price or the customer you're targeting.
Want an expert pricing review? Get matched with a consultant.