How to price your first offer without guessing

Guessed prices are the single most common cause of small businesses that work hard and still don't grow. The fix isn't a spreadsheet — it's three questions, answered in order.

1. What does it actually cost to deliver one? Not what the ingredients cost. What one delivered unit costs including materials, your time, transport, waste, and the amortised share of tools and space. If in doubt, cost it high — you can adjust down with evidence.

2. What margin do you need to sustain the business? Gross margin covers operating expenses, taxes and reinvestment before it pays you. A margin that feels wide often becomes narrow after the real costs of running a business are counted.

3. What's the market ceiling in your channel? Not "what competitors charge" — what customers in your specific channel are used to paying. The ceiling constrains the top; your cost + margin sets the floor. If the two overlap, you have a workable price. If they don't, the answer is either lower cost, higher-value offer, or a different channel.

Once you have a defensible starting price, don't renegotiate it on the first tough call. Write it down — this is your pricing rule. If the pricing rule survives the first ten sales, you have a price. If it doesn't, the rule needs revision, not the price.

Inside the Study Desk, the Pricing & Profitability program takes this further — segment-by-segment margin analysis, price-increase planning with market checks, and a defensible rule you can hand to a partner or a lender.