How to Price Your Products and Services for Profit
Stop guessing what to charge. Learn how to calculate your real costs, set sustainable prices and protect the profit your business needs to survive and grow.
- Calculate the true cost of products and services
- Understand markup, margin and break-even pricing
- Include labour, overheads, fees and VAT where applicable
- Build prices that support a sustainable South African business
Digital eBook · Instant access after successful checkout · Written for the South African business environment
Practical digital business guide
Are You Making Sales Without Making Enough Profit?
Many small businesses appear busy from the outside. Customers are buying, orders are being completed and money is entering the bank account.
Yet very little remains after suppliers, transport, electricity, payment fees and other expenses have been paid.
This often happens because selling prices are based on guesswork, competitor prices or an incomplete cost calculation.
A price is not profitable simply because it is higher than the cost of stock or raw materials. Your price must also help pay for the rest of the business and provide a return for the owner.
You Made R1,000 in Sales. How Much Did You Really Earn?
Before choosing your selling prices, understand what remains after business costs.
Follow Naledi, a fictional South African home baker, as she calculates the difference between sales, business profit and the cash she takes home.
The calculation:
R1,000 in sales − R450 direct costs − R250 operating costs = R300 profit.
If Naledi withdraws R180 for herself, R120 of this cash remains in the business. The owner drawing does not change the R300 accounting profit in this sole-proprietor example.
This simplified illustration assumes the stated sales and expenses have been settled. Tax, unlisted expenses and other cash obligations are excluded.
Build a Pricing System You Can Explain, Review and Improve
The goal is not to find one magical markup percentage. It is to create a repeatable pricing method that reflects your costs, market, customers and required profit.
Find Your True Costs
Identify direct costs, labour, overheads, transaction fees, delivery costs, wastage and other expenses that are often missed.
Calculate Product Prices
Move beyond simply adding a random percentage to the supplier or manufacturing cost.
Price Your Services
Calculate hourly, project, package or retainer prices that reflect billable time and the real cost of delivering the work.
Understand Margin
Learn why markup and gross margin are not the same and why confusing them can lead to underpricing.
Calculate Break-Even
Determine how many units, jobs or billable hours you need before the business begins producing profit.
Review Prices Confidently
Recognise when prices need to increase and communicate changes without automatically discounting.
Different Businesses Need Different Pricing Calculations
A retailer, manufacturer, consultant and local service provider cannot all use exactly the same method. The guide helps you identify the costs and earning logic behind your particular offer.
Pricing a Product
Retail, ecommerce, food, manufacturing and resale.
- Stock or raw materials
- Packaging and labels
- Production labour
- Delivery and fulfilment
- Payment-gateway charges
- Returns and wastage
- Marketing and overheads
Pricing a Service
Consultants, freelancers and local service businesses.
- Owner or employee labour
- Travel and preparation
- Quoting and administration
- Equipment and software
- Insurance and compliance
- Non-billable working hours
- Profit and business reserves
Free Video: How Much Should You Charge for a Garden Service?
Follow Sipho as he prepares a practical garden-service quotation in South African rand. Learn how to include labour, transport, equipment, overheads and contingency before deciding what to charge.
The worked example: R680 operating costs + R70 contingency = R750 cost-and-risk budget.
Against an illustrative R1,000 quotation, R250 remains if the full budget is used, before tax and unlisted expenses.
Educational example only. These figures are not recommended market rates or guaranteed profits.
A 50% Markup Does Not Produce a 50% Margin
Assume a product costs R100 and the owner adds a 50% markup. The selling price becomes R150 and the gross profit is R50.
However, that R50 represents only 33.3% of the R150 selling price.
The margin could be lower if packaging, delivery, payment fees or overheads were excluded from the original R100 cost.
Practical Pricing Topics for Real Small Businesses
The eBook brings the main pricing decisions together into one structured resource for starting, reviewing or growing a business.
Useful Across the H2BZA Business Library
The principles can be applied whether you sell physical products, professional expertise, local services or a combination of products and services.
- Small retailers
- Online sellers
- Food businesses
- Home-based businesses
- Manufacturers
- Agricultural enterprises
- Local service providers
- Consultants
- Freelancers
- Contractors
- New entrepreneurs
- Existing business owners
Start With the Free South African Pricing Guide
Read the supporting article for an introduction to true costs, markup, margins, break-even pricing and reasons small businesses sometimes undercharge.
Stop Letting Guesswork Decide Whether Your Business Makes Money
Work through practical pricing principles and calculations so that your selling prices are based on a clearer understanding of costs, margins and required profit.
Whether you sell products, services or both, this guide helps you develop a method you can explain, apply and review.
Douw Steyn
Douw Steyn develops practical business guides for South Africans who want to start, manage and grow businesses with a clearer understanding of costs, profitability and operations.
How To Books ZA focuses on practical information for real South African entrepreneurs.
More About Douw Steyn →Questions About the Pricing Guide
Is this guide written for South African businesses?
Yes. It is written with the South African business environment in mind, including local costs and pricing considerations.
Does the guide cover both products and services?
Yes. It addresses pricing considerations for physical products and service-based businesses.
Is this suitable for a new business?
Yes. The guide is designed to help prospective and existing business owners understand the fundamentals of costing and pricing.
Does it explain markup and profit margin?
Yes. It explains the distinction between markup and margin and why these calculations should not be confused.
Can I use it to calculate my service rate?
The guide discusses service pricing, including labour, overheads, realistic billable time and required profit.
Does the guide discuss VAT?
Yes. VAT-inclusive and VAT-exclusive pricing are among the topics covered. Check current requirements applicable to your business with SARS or a qualified tax professional.
Is this a physical printed book?
No. It is a digital eBook available after successful purchase.
Will using the guide guarantee that my business makes a profit?
No. Business profitability depends on costs, demand, execution, market conditions and other factors. The guide provides educational methods, not a guarantee of financial results.
Related H2BZA Business Resources
Price With a Clearer Understanding of Your Business Numbers
Learn how to calculate costs, understand margins, review selling prices and make more informed pricing decisions.
This page provides general educational information for South African entrepreneurs. Actual costs, tax requirements, VAT treatment, market conditions and business results differ between businesses and may change. Use your own current figures and seek appropriate professional advice where necessary. No profit or income result is guaranteed.