How to Price Your Products for Maximum Profit: Profitable Products

Discover how to price your products for maximum profit with this comprehensive guide to small business strategies for success.

You’ll learn why profit is so important and how to profitably price your products to factor in all the costs and how to pay for your time.

Why Your Product Pricing Strategy is Crucial for Success

The only place you’ll make money in your business is the difference between what it costs you to make your product and what you sell it for.

Are you aware of your cost prices and profit margins to ensure you’re making enough profit on each sale?

If not, you’re in the right place!

You can NOT continue to grow your business if you are not making money on each product you sell.

The profit you make builds a sustainable business, pays its bills and pays you!

If you have smaller profit margins, you need to make more orders to hit your sales targets and income goals. Which can lead to burnout which we want to avoid!

Pricing should not just depend on your profit margins. Value, style, USPs, quality and desirability play a role too.

All the Costs to Factor into Your Product Pricing

Add you adding all of these costs into your product price:

All the materials or supplier cost price, including delivery/duties
Product packaging
Postage packaging
Postage (if included for free)
Dispatch costs
Paying for your time (if a maker)
Warehouse/fulfilment costs (if using)
Website/marketplace fees

You need to include EVERY COST, even packaging, leaflets etc. All these things can add up and impact your profit margin.

Paying for Your Time & Setting the Right Price

Ensure you pay yourself if you’re a maker and make your products. Commit to paying yourself so it happens from the start.

You need to make sure you have good profit margins to start with. So you need to know your numbers!

As you grow you could outsource the making so you need to factor this cost in now.

Decide on your hourly rate. What is right for you?

Time yourself on all parts of the process and batch-make where you can to reduce time.

Add the time it takes to make each product and charge based on your hourly rate.

Then you can set sales targets and know how much you need to make to always pay for your time.

How to Determine the Perfect Price for Your Products

Profit margin is what is left after product costs are taken out and is also known as retail gross profit.

The net profit margin is what remains after subtracting the product costs and all other overhead expenses.

E.g. Office space, stationery, staff costs, electricity.

Gross profit margin calculation =

(Selling price – Product costs) / Selling price x 100

Gross profit margin (inc VAT) calculation =

((Selling price/1.2)-Product costs)/(Selling price/1.2) x 100

Profitable Product Pricing Calculation Example:

Profit Margins to Boost Your Sales

It’s not just your own website you will sell on, you will sell on different sales channels to need to ensure you have a good profit margin across all platforms.

Having varied sales channels is ideal to future-proof your business for success.

But different platforms have different commission structures and therefore different margins for you.

You want to aim for the following margins (or more!) on these channels:

Own website: 60%+ (70-80% if you want to wholesale)
Etsy: 50-60%+
notonthehighstreet.com: 30-50%+
Wholesale: 30-50%+

Blended Profit Margin

Consider your blended margin = your average margin across all products.

Some products will have more margin than others.

Ensure you have a good margin on your overall collection – particularly your best sellers.

And consider your blended margin across all your sales channels, based on the split between each platform.

Need help to Price Your Products?

Need help with how to price your products for maximum profit?

Watch the Profitable Products Masterclass to:

Shift your perspective on pricing
Understand your profit margin
And confidently increase your prices!

Download your pricing workbook & profit margin spreadsheet. So you can take action to get your pricing right straight away, with all the formulas included to make it easy for you.

Plus watch the replay of the interactive workshop, including seven steps to know your profit margin, profitably price your products and confidently increase your prices.

Watch the workshop now