{"id":4696,"date":"2026-03-21T20:18:31","date_gmt":"2026-03-22T02:18:31","guid":{"rendered":"https:\/\/victorvizcaino.com\/blog\/?p=4696"},"modified":"2026-03-21T20:28:16","modified_gmt":"2026-03-22T02:28:16","slug":"pricing-strategy-how-to-set-prices","status":"publish","type":"post","link":"https:\/\/victorvizcaino.com\/blog\/pricing-strategy-how-to-set-prices\/","title":{"rendered":"\ud83d\udcb0 Pricing: How to Set Prices That Don&#8217;t Hurt Your Business"},"content":{"rendered":"<p class=\"ds-markdown-paragraph\">Setting prices is one of the most critical decisions you&#8217;ll make as a business owner. Price too high, and customers walk away. Price too low, and you lose money on every sale\u2014or worse, go out of business.<\/p>\n<p class=\"ds-markdown-paragraph\">In this article, I explain the four fundamental factors of pricing, how to calculate them, and how to find a price that covers your costs, generates profit, and keeps your business sustainable.<\/p>\n<hr \/>\n<h2>\ud83d\udccc The Four Factors of Pricing<\/h2>\n<p class=\"ds-markdown-paragraph\">To set a price that works, you need to consider four elements:<\/p>\n<div class=\"ds-scroll-area ds-scroll-area--show-on-focus-within _1210dd7 c03cafe9\">\n<table>\n<thead>\n<tr>\n<th>Factor<\/th>\n<th>What It Covers<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>Materials<\/strong><\/td>\n<td>Direct costs of producing your product or service<\/td>\n<\/tr>\n<tr>\n<td><strong>Business expenses<\/strong><\/td>\n<td>Overhead costs to keep your business running<\/td>\n<\/tr>\n<tr>\n<td><strong>Profit margin<\/strong><\/td>\n<td>Your earnings after all costs<\/td>\n<\/tr>\n<tr>\n<td><strong>Break-even point<\/strong><\/td>\n<td>Minimum sales needed to cover costs<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<blockquote>\n<p class=\"ds-markdown-paragraph\">\ud83d\udca1\u00a0<strong>Skipping any of these factors leads to prices that either lose money or fail to sustain your business.<\/strong><\/p>\n<\/blockquote>\n<hr \/>\n<h2>1. \ud83d\udee0\ufe0f Materials: What Goes Into Your Product or Service<\/h2>\n<p class=\"ds-markdown-paragraph\">Materials are the direct costs required to create what you sell. These are sometimes called\u00a0<strong>cost of goods sold (COGS)<\/strong>\u00a0or\u00a0<strong>variable costs<\/strong>\u2014they change with each unit you produce.<\/p>\n<h3>For Products<\/h3>\n<div class=\"ds-scroll-area ds-scroll-area--show-on-focus-within _1210dd7 c03cafe9\">\n<table>\n<thead>\n<tr>\n<th>Category<\/th>\n<th>Examples<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>Raw materials<\/strong><\/td>\n<td>Ingredients, fabric, wood, metal, paper<\/td>\n<\/tr>\n<tr>\n<td><strong>Packaging<\/strong><\/td>\n<td>Boxes, bags, labels, containers<\/td>\n<\/tr>\n<tr>\n<td><strong>Components<\/strong><\/td>\n<td>Parts, fasteners, electronics<\/td>\n<\/tr>\n<tr>\n<td><strong>Consumables<\/strong><\/td>\n<td>Disposable utensils, cleaning supplies used per unit<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<h3>For Services<\/h3>\n<div class=\"ds-scroll-area ds-scroll-area--show-on-focus-within _1210dd7 c03cafe9\">\n<table>\n<thead>\n<tr>\n<th>Category<\/th>\n<th>Examples<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>Supplies<\/strong><\/td>\n<td>Paper, ink, software licenses, tools<\/td>\n<\/tr>\n<tr>\n<td><strong>Subcontractors<\/strong><\/td>\n<td>Specialists hired per project<\/td>\n<\/tr>\n<tr>\n<td><strong>Travel<\/strong><\/td>\n<td>Transportation, lodging for on-site work<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<blockquote>\n<p class=\"ds-markdown-paragraph\">\ud83d\udca1\u00a0<strong>Calculate materials per unit. If you make crepes, how much flour, Nutella, strawberries, and whipped cream goes into each one?<\/strong><\/p>\n<\/blockquote>\n<hr \/>\n<h2>2. \ud83c\udfe2 Business Expenses: Keeping the Lights On<\/h2>\n<p class=\"ds-markdown-paragraph\">Business expenses are the costs you incur regardless of how many units you sell. These are also called\u00a0<strong>fixed costs<\/strong>\u00a0or\u00a0<strong>overhead<\/strong>.<\/p>\n<div class=\"ds-scroll-area ds-scroll-area--show-on-focus-within _1210dd7 c03cafe9\">\n<table>\n<thead>\n<tr>\n<th>Category<\/th>\n<th>Examples<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>Rent<\/strong><\/td>\n<td>Lease for your space<\/td>\n<\/tr>\n<tr>\n<td><strong>Utilities<\/strong><\/td>\n<td>Electricity, water, gas, internet<\/td>\n<\/tr>\n<tr>\n<td><strong>Payroll<\/strong><\/td>\n<td>Salaries (yours and employees)<\/td>\n<\/tr>\n<tr>\n<td><strong>Equipment<\/strong><\/td>\n<td>Maintenance, depreciation, leasing costs<\/td>\n<\/tr>\n<tr>\n<td><strong>Software<\/strong><\/td>\n<td>Web hosting, CRM, design tools, payment platforms<\/td>\n<\/tr>\n<tr>\n<td><strong>Marketing<\/strong><\/td>\n<td>Advertising, social media tools<\/td>\n<\/tr>\n<tr>\n<td><strong>Professional services<\/strong><\/td>\n<td>Accounting, legal, consulting<\/td>\n<\/tr>\n<tr>\n<td><strong>Insurance<\/strong><\/td>\n<td>Liability, property, workers&#8217; comp<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<blockquote>\n<p class=\"ds-markdown-paragraph\">\ud83d\udca1\u00a0<strong>These costs exist whether you sell one unit or one thousand. They must be covered by your pricing.<\/strong><\/p>\n<\/blockquote>\n<hr \/>\n<h2>3. \ud83d\udcc8 Profit Margin: What You Keep<\/h2>\n<p class=\"ds-markdown-paragraph\">Profit is what&#8217;s left after covering all costs. It&#8217;s not greed\u2014it&#8217;s what allows you to:<\/p>\n<ul>\n<li class=\"ds-markdown-paragraph\">Reinvest in your business<\/li>\n<li class=\"ds-markdown-paragraph\">Handle emergencies<\/li>\n<li class=\"ds-markdown-paragraph\">Grow and expand<\/li>\n<li class=\"ds-markdown-paragraph\">Reward yourself for your work<\/li>\n<\/ul>\n<div class=\"ds-scroll-area ds-scroll-area--show-on-focus-within _1210dd7 c03cafe9\">\n<table>\n<thead>\n<tr>\n<th>Type of Profit<\/th>\n<th>Definition<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>Gross profit<\/strong><\/td>\n<td>Revenue minus materials (what covers overhead + profit)<\/td>\n<\/tr>\n<tr>\n<td><strong>Net profit<\/strong><\/td>\n<td>Revenue minus all costs (what you actually keep)<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<h3>What Margin Should You Aim For?<\/h3>\n<div class=\"ds-scroll-area ds-scroll-area--show-on-focus-within _1210dd7 c03cafe9\">\n<table>\n<thead>\n<tr>\n<th>Industry<\/th>\n<th>Typical Gross Margin<\/th>\n<th>Typical Net Margin<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>Food service<\/strong><\/td>\n<td>30-40%<\/td>\n<td>3-6%<\/td>\n<\/tr>\n<tr>\n<td><strong>Retail<\/strong><\/td>\n<td>25-35%<\/td>\n<td>2-5%<\/td>\n<\/tr>\n<tr>\n<td><strong>Manufacturing<\/strong><\/td>\n<td>30-45%<\/td>\n<td>5-10%<\/td>\n<\/tr>\n<tr>\n<td><strong>Services<\/strong><\/td>\n<td>50-70%<\/td>\n<td>10-20%<\/td>\n<\/tr>\n<tr>\n<td><strong>Software<\/strong><\/td>\n<td>70-85%<\/td>\n<td>15-25%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<blockquote>\n<p class=\"ds-markdown-paragraph\">\ud83d\udca1\u00a0<strong>A 100% margin (selling for double your material cost) is common in some industries, but it doesn&#8217;t mean 100% profit\u2014you still have overhead and taxes to pay.<\/strong><\/p>\n<\/blockquote>\n<hr \/>\n<h2>4. \u2696\ufe0f Break-Even Point: When You Stop Losing Money<\/h2>\n<p class=\"ds-markdown-paragraph\">The\u00a0<strong>break-even point<\/strong>\u00a0is the number of units you must sell (or revenue you must generate) to cover all your costs. Below this, you lose money. Above this, you make profit.<\/p>\n<h3>Break-Even Formula<\/h3>\n<div class=\"md-code-block md-code-block-light\">\n<pre>Break-Even Units = Fixed Costs \u00f7 (Price - Variable Cost per Unit)<\/pre>\n<\/div>\n<p class=\"ds-markdown-paragraph\">Where:<\/p>\n<ul>\n<li class=\"ds-markdown-paragraph\"><strong>Fixed Costs:<\/strong>\u00a0Expenses that don&#8217;t change with sales (rent, salaries, etc.)<\/li>\n<li class=\"ds-markdown-paragraph\"><strong>Variable Cost per Unit:<\/strong>\u00a0Materials and other costs per unit<\/li>\n<li class=\"ds-markdown-paragraph\"><strong>Price:<\/strong>\u00a0Your selling price per unit<\/li>\n<\/ul>\n<h3>Example: Small Coffee Shop<\/h3>\n<div class=\"ds-scroll-area ds-scroll-area--show-on-focus-within _1210dd7 c03cafe9\">\n<table>\n<thead>\n<tr>\n<th>Cost Type<\/th>\n<th>Amount (Monthly)<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Rent<\/td>\n<td>$10,000<\/td>\n<\/tr>\n<tr>\n<td>Utilities<\/td>\n<td>$3,000<\/td>\n<\/tr>\n<tr>\n<td>Salaries (2 people)<\/td>\n<td>$20,000<\/td>\n<\/tr>\n<tr>\n<td>Insurance &amp; fees<\/td>\n<td>$2,000<\/td>\n<\/tr>\n<tr>\n<td><strong>Total Fixed Costs<\/strong><\/td>\n<td><strong>$35,000<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<div class=\"ds-scroll-area ds-scroll-area--show-on-focus-within _1210dd7 c03cafe9\">\n<div class=\"ds-scroll-area__gutters\">\n<div class=\"ds-scroll-area__vertical-gutter\"><\/div>\n<\/div>\n<table>\n<thead>\n<tr>\n<th>Per Coffee<\/th>\n<th>Cost<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Coffee beans, cup, lid, sugar<\/td>\n<td>$10<\/td>\n<\/tr>\n<tr>\n<td><strong>Variable Cost per Unit<\/strong><\/td>\n<td><strong>$10<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<div class=\"ds-scroll-area ds-scroll-area--show-on-focus-within _1210dd7 c03cafe9\">\n<div class=\"ds-scroll-area__gutters\">\n<div class=\"ds-scroll-area__vertical-gutter\"><\/div>\n<\/div>\n<table>\n<thead>\n<tr>\n<th>Price per coffee<\/th>\n<th>$50<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Contribution margin<\/td>\n<td>$40 ($50 &#8211; $10)<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p class=\"ds-markdown-paragraph\"><strong>Break-Even Calculation:<\/strong><\/p>\n<div class=\"md-code-block md-code-block-light\">\n<pre>Break-Even Units = $35,000 \u00f7 ($50 - $10)\r\nBreak-Even Units = $35,000 \u00f7 $40\r\nBreak-Even Units = 875 coffees per month<\/pre>\n<\/div>\n<blockquote>\n<p class=\"ds-markdown-paragraph\">\ud83d\udca1\u00a0<strong>This coffee shop must sell 875 coffees monthly just to break even. Every coffee after that is profit.<\/strong><\/p>\n<\/blockquote>\n<hr \/>\n<h2>\ud83d\udcca Putting It All Together: The Creper\u00eda Example<\/h2>\n<p class=\"ds-markdown-paragraph\">Let&#8217;s rebuild the creper\u00eda example with accurate calculations.<\/p>\n<h3>Step 1: Calculate Material Costs per Crepe<\/h3>\n<div class=\"ds-scroll-area ds-scroll-area--show-on-focus-within _1210dd7 c03cafe9\">\n<table>\n<thead>\n<tr>\n<th>Ingredient<\/th>\n<th>Cost per Unit<\/th>\n<th>Quantity per Crepe<\/th>\n<th>Cost per Crepe<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Batter mix<\/td>\n<td>$20 for 10 crepes<\/td>\n<td>1\/10 batch<\/td>\n<td>$2.00<\/td>\n<\/tr>\n<tr>\n<td>Nutella<\/td>\n<td>$80 for 350g<\/td>\n<td>20g<\/td>\n<td>$4.57<\/td>\n<\/tr>\n<tr>\n<td>Whipped cream<\/td>\n<td>$50 for 1L<\/td>\n<td>20g<\/td>\n<td>$1.00<\/td>\n<\/tr>\n<tr>\n<td>Strawberries<\/td>\n<td>$60 for 1kg<\/td>\n<td>50g<\/td>\n<td>$3.00<\/td>\n<\/tr>\n<tr>\n<td>Plate + napkin<\/td>\n<td>$5 each<\/td>\n<td>1<\/td>\n<td>$5.00<\/td>\n<\/tr>\n<tr>\n<td><strong>Total Materials<\/strong><\/td>\n<td><\/td>\n<td><\/td>\n<td><strong>$15.57<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<h3>Step 2: Determine Monthly Fixed Costs<\/h3>\n<div class=\"ds-scroll-area ds-scroll-area--show-on-focus-within _1210dd7 c03cafe9\">\n<table>\n<thead>\n<tr>\n<th>Expense<\/th>\n<th>Monthly Amount<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Rent<\/td>\n<td>$15,000<\/td>\n<\/tr>\n<tr>\n<td>Electricity<\/td>\n<td>$3,000<\/td>\n<\/tr>\n<tr>\n<td>Gas<\/td>\n<td>$2,000<\/td>\n<\/tr>\n<tr>\n<td>Water<\/td>\n<td>$1,000<\/td>\n<\/tr>\n<tr>\n<td>Internet<\/td>\n<td>$1,000<\/td>\n<\/tr>\n<tr>\n<td>Salaries (2 employees)<\/td>\n<td>$20,000<\/td>\n<\/tr>\n<tr>\n<td>Payment terminal fees<\/td>\n<td>$1,000<\/td>\n<\/tr>\n<tr>\n<td>Insurance<\/td>\n<td>$2,000<\/td>\n<\/tr>\n<tr>\n<td>Marketing<\/td>\n<td>$3,000<\/td>\n<\/tr>\n<tr>\n<td><strong>Total Fixed Costs<\/strong><\/td>\n<td><strong>$48,000<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<h3>Step 3: Choose Your Price and Calculate Margin<\/h3>\n<p class=\"ds-markdown-paragraph\">Let&#8217;s say you price each crepe at\u00a0<strong>$60<\/strong>.<\/p>\n<div class=\"ds-scroll-area ds-scroll-area--show-on-focus-within _1210dd7 c03cafe9\">\n<table>\n<thead>\n<tr>\n<th>Calculation<\/th>\n<th>Amount<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Price<\/td>\n<td>$60.00<\/td>\n<\/tr>\n<tr>\n<td>Materials<\/td>\n<td>($15.57)<\/td>\n<\/tr>\n<tr>\n<td><strong>Gross Profit per Crepe<\/strong><\/td>\n<td><strong>$44.43<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<h3>Step 4: Calculate Break-Even Point<\/h3>\n<div class=\"md-code-block md-code-block-light\">\n<pre>Break-Even Units = $48,000 \u00f7 ($60 - $15.57)\r\nBreak-Even Units = $48,000 \u00f7 $44.43\r\nBreak-Even Units = 1,080 crepes per month<\/pre>\n<\/div>\n<div class=\"ds-scroll-area ds-scroll-area--show-on-focus-within _1210dd7 c03cafe9\">\n<table>\n<thead>\n<tr>\n<th>Concept<\/th>\n<th>Amount<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>Break-even sales<\/strong><\/td>\n<td>1,080 crepes<\/td>\n<\/tr>\n<tr>\n<td><strong>Break-even revenue<\/strong><\/td>\n<td>$64,800<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<h3>Step 5: Project Profit at Different Sales Levels<\/h3>\n<div class=\"ds-scroll-area ds-scroll-area--show-on-focus-within _1210dd7 c03cafe9\">\n<table>\n<thead>\n<tr>\n<th>Monthly Sales<\/th>\n<th>Revenue<\/th>\n<th>Materials Cost<\/th>\n<th>Fixed Costs<\/th>\n<th>Gross Profit<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>1,080 crepes<\/td>\n<td>$64,800<\/td>\n<td>$16,816<\/td>\n<td>$48,000<\/td>\n<td>$0 (break-even)<\/td>\n<\/tr>\n<tr>\n<td>1,500 crepes<\/td>\n<td>$90,000<\/td>\n<td>$23,355<\/td>\n<td>$48,000<\/td>\n<td>$18,645<\/td>\n<\/tr>\n<tr>\n<td>2,000 crepes<\/td>\n<td>$120,000<\/td>\n<td>$31,140<\/td>\n<td>$48,000<\/td>\n<td>$40,860<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<blockquote>\n<p class=\"ds-markdown-paragraph\">\ud83d\udca1\u00a0<strong>At 2,000 crepes per month, the business makes $40,860 profit before taxes.<\/strong><\/p>\n<\/blockquote>\n<hr \/>\n<h2>\ud83d\udccb Common Pricing Mistakes<\/h2>\n<div class=\"ds-scroll-area ds-scroll-area--show-on-focus-within _1210dd7 c03cafe9\">\n<table>\n<thead>\n<tr>\n<th>Mistake<\/th>\n<th>Consequence<\/th>\n<th>Solution<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>Not accounting for all costs<\/strong><\/td>\n<td>You lose money on every sale<\/td>\n<td>Track every expense<\/td>\n<\/tr>\n<tr>\n<td><strong>Pricing based on competitor only<\/strong><\/td>\n<td>You may be underpricing or overpricing<\/td>\n<td>Know your costs first<\/td>\n<\/tr>\n<tr>\n<td><strong>Ignoring fixed costs<\/strong><\/td>\n<td>You don&#8217;t know your break-even<\/td>\n<td>Include overhead in pricing<\/td>\n<\/tr>\n<tr>\n<td><strong>No profit margin<\/strong><\/td>\n<td>No money to grow or handle emergencies<\/td>\n<td>Add a margin above costs<\/td>\n<\/tr>\n<tr>\n<td><strong>Discounting without planning<\/strong><\/td>\n<td>You lose money on every discounted sale<\/td>\n<td>Build discounts into pricing strategy<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<blockquote>\n<p class=\"ds-markdown-paragraph\">\ud83d\udca1\u00a0<strong>The most common fatal mistake: pricing based on what others charge without knowing your own costs.<\/strong><\/p>\n<\/blockquote>\n<hr \/>\n<h2>\ud83d\udca1 How to Set a Price That Works<\/h2>\n<h3>Step 1: Calculate Your Costs<\/h3>\n<ul>\n<li class=\"ds-markdown-paragraph\"><strong>Material cost per unit:<\/strong>\u00a0What goes into each product or service<\/li>\n<li class=\"ds-markdown-paragraph\"><strong>Monthly fixed costs:<\/strong>\u00a0All expenses regardless of sales<\/li>\n<li class=\"ds-markdown-paragraph\"><strong>Desired profit:<\/strong>\u00a0What you want to earn<\/li>\n<\/ul>\n<h3>Step 2: Estimate Your Sales Volume<\/h3>\n<p class=\"ds-markdown-paragraph\">How many units do you realistically expect to sell monthly?<\/p>\n<h3>Step 3: Calculate Your Minimum Price<\/h3>\n<div class=\"md-code-block md-code-block-light\">\n<pre>Minimum Price = (Fixed Costs \u00f7 Estimated Units) + Material Cost per Unit<\/pre>\n<\/div>\n<p class=\"ds-markdown-paragraph\">If you expect to sell 1,500 crepes monthly:<\/p>\n<div class=\"md-code-block md-code-block-light\">\n<pre>Minimum Price = ($48,000 \u00f7 1,500) + $15.57\r\nMinimum Price = $32 + $15.57\r\nMinimum Price = $47.57<\/pre>\n<\/div>\n<p class=\"ds-markdown-paragraph\">This price covers all costs but leaves no profit margin.<\/p>\n<h3>Step 4: Add Profit Margin<\/h3>\n<p class=\"ds-markdown-paragraph\">Add a margin that allows you to reinvest and grow. For food service, a 20-30% gross margin above costs is common.<\/p>\n<p class=\"ds-markdown-paragraph\"><strong>Suggested price:<\/strong>\u00a0$60 (covers costs and provides $44.43 gross profit per crepe)<\/p>\n<h3>Step 5: Test and Adjust<\/h3>\n<ul>\n<li class=\"ds-markdown-paragraph\">If sales are lower than expected, either reduce costs or adjust price<\/li>\n<li class=\"ds-markdown-paragraph\">If sales exceed expectations, consider if price could be raised<\/li>\n<li class=\"ds-markdown-paragraph\">Monitor your actual costs\u2014they change over time<\/li>\n<\/ul>\n<hr \/>\n<h2>\ud83d\udcca Pricing Strategy Comparison<\/h2>\n<div class=\"ds-scroll-area ds-scroll-area--show-on-focus-within _1210dd7 c03cafe9\">\n<table>\n<thead>\n<tr>\n<th>Strategy<\/th>\n<th>Example<\/th>\n<th>Best For<\/th>\n<th>Risk<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>Cost-plus<\/strong><\/td>\n<td>Cost + markup<\/td>\n<td>Manufacturing, retail<\/td>\n<td>May ignore market<\/td>\n<\/tr>\n<tr>\n<td><strong>Value-based<\/strong><\/td>\n<td>Price based on perceived value<\/td>\n<td>Services, unique products<\/td>\n<td>Hard to calculate<\/td>\n<\/tr>\n<tr>\n<td><strong>Competitive<\/strong><\/td>\n<td>Match competitors<\/td>\n<td>Commodity products<\/td>\n<td>May not cover costs<\/td>\n<\/tr>\n<tr>\n<td><strong>Penetration<\/strong><\/td>\n<td>Low price to enter market<\/td>\n<td>New businesses<\/td>\n<td>Hard to raise later<\/td>\n<\/tr>\n<tr>\n<td><strong>Premium<\/strong><\/td>\n<td>High price for exclusivity<\/td>\n<td>Luxury, niche<\/td>\n<td>Limited market<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<blockquote>\n<p class=\"ds-markdown-paragraph\">\ud83d\udca1\u00a0<strong>Start with cost-plus to ensure you don&#8217;t lose money. Refine as you learn your market.<\/strong><\/p>\n<\/blockquote>\n<hr \/>\n<h2>\ud83d\udccb Pricing Checklist<\/h2>\n<p class=\"ds-markdown-paragraph\">Before setting your final price, verify:<\/p>\n<ul>\n<li class=\"ds-markdown-paragraph\">\u2610 All material costs are included<\/li>\n<li class=\"ds-markdown-paragraph\">\u2610 All fixed costs are accounted for<\/li>\n<li class=\"ds-markdown-paragraph\">\u2610 You know your break-even point<\/li>\n<li class=\"ds-markdown-paragraph\">\u2610 You have a profit margin above break-even<\/li>\n<li class=\"ds-markdown-paragraph\">\u2610 The price covers taxes (IVA, ISR)<\/li>\n<li class=\"ds-markdown-paragraph\">\u2610 You have room for discounts without losing money<\/li>\n<li class=\"ds-markdown-paragraph\">\u2610 The price is competitive for your market<\/li>\n<\/ul>\n<hr \/>\n<h2>\ud83d\udcda Useful Internal Links<\/h2>\n<ul>\n<li class=\"ds-markdown-paragraph\"><a href=\"https:\/\/victorvizcaino.com\/blog\/income-expenses-financial-foundation\/\">Income and Expenses: The Foundation of Financial Health<\/a><\/li>\n<li class=\"ds-markdown-paragraph\"><a href=\"https:\/\/victorvizcaino.com\/blog\/business-profit-measure-success\/\">Profit: The Measure of Business Success<\/a><\/li>\n<li class=\"ds-markdown-paragraph\"><a href=\"https:\/\/victorvizcaino.com\/blog\/vat-income-tax-mexico-iva-isr\/\">IVA and ISR: The Two Pillars of Taxation in Mexico<\/a><\/li>\n<li class=\"ds-markdown-paragraph\"><a href=\"https:\/\/victorvizcaino.com\/blog\/calculate-isr-freelancers-small-businesses\/\">How to Calculate ISR for Freelancers and Small Businesses<\/a><\/li>\n<\/ul>\n<hr \/>\n<h2>\u2705 Conclusion<\/h2>\n<p class=\"ds-markdown-paragraph\">Setting prices isn&#8217;t about guessing or copying competitors. It&#8217;s about knowing your numbers: your material costs, your fixed expenses, your break-even point, and your desired profit margin.<\/p>\n<p class=\"ds-markdown-paragraph\"><strong>Remember:<\/strong><\/p>\n<ul>\n<li>Calculate your material costs per unit accurately<\/li>\n<li>Include all fixed costs\u2014they don&#8217;t disappear if you sell less<\/li>\n<li>Know your break-even point; it&#8217;s your minimum survival number<\/li>\n<li>Add a profit margin that allows you to grow<\/li>\n<li>Review and adjust as costs and markets change<\/li>\n<\/ul>\n<p class=\"ds-markdown-paragraph\">A price that covers your costs and provides profit isn&#8217;t expensive\u2014it&#8217;s sustainable. Anything less puts your business at risk.<\/p>\n<p class=\"ds-markdown-paragraph\"><strong>Know your costs. Set your price. Protect your business.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Setting prices is one of the most critical decisions you&#8217;ll make as a business owner. Price too high, and customers&hellip;<\/p>\n","protected":false},"author":1,"featured_media":4697,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[58,36],"tags":[],"class_list":["post-4696","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","category-planning"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.2 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Pricing: How to Set Prices That Don&#039;t Hurt Your Business<\/title>\n<meta name=\"description\" content=\"Learn the four factors of pricing: materials, business expenses, profit margin, and break-even point. 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