How to Price Your Products to Make a Real Profit

Pricing is the most important financial decision a small business owner makes — and most make it without the information they need. They look at what the shop next door charges, add a little, and call it a price. This works until it does not.

The full cost of a product

The purchase price is only one part of your cost. The true cost of getting a product onto your shelf includes the purchase price, transport to collect it, any storage or spoilage losses, and the fraction of your monthly rent and utilities that applies to that product. When you add all of this up, the margin you thought you had is often much smaller.

The four pricing components

• Cost of goods — what you paid for the item
• Operating costs — your share of rent, transport, utilities
• Desired margin — how much profit you want on each sale
• Market price — what the market will bear

How ShopTrack helps you price correctly

When you add a product to ShopTrack, you enter the cost price and the selling price. ShopTrack calculates your gross margin automatically and shows it on every product. Over a month, you can see which products make you the most profit — not just the most revenue.

The minimum price lock

ShopTrack allows you to set a minimum selling price for each product. Staff cannot sell below this price even if they want to give a discount. This protects your margin from both accidental and intentional below-cost selling.

According to OHADA commercial regulations applicable in Cameroon, businesses that maintain documented cost and pricing records are better positioned for credit applications. The INS Cameroun estimates that incorrect pricing is a contributing factor in over 30% of small business closures in the informal sector annually.

ShopTrack calculates your margin on every product and every sale automatically. Free plan available at shoptrack.org.