One of the biggest reasons small businesses struggle is not lack of customers, It’s wrong pricing.
Some people price too low and make little profit.

Others price too high and lose customers.
If you don’t get pricing right, your business will suffer ,no matter how good your product is.

In this guide, you’ll learn how to price your products or services correctly and profitably.

Interested in starting a Business? Read my Guide on Starting a Business in 2026

Why Pricing Is So Important

Your pricing determines:

• Your profit
• Your customer base
• Your business growth

Price too low, you work hard with little gain
Price too high , customers walk away

Step 1: Know Your Total Cost

Before setting any price, calculate:

• Cost of goods/services
• Transportation
• Rent (if any)
• Data/electricity
• Miscellaneous expenses

Example:
If you spend ₦5,000 total,
Your price must be ABOVE that to make profit

Step 2: Add Your Profit Margin

After cost, add your profit.
Simple Formula: Price = Cost + Profit
Example:
Cost = ₦5,000
Profit = ₦2,000

Selling price = ₦7,000

Step 3: Study Your Competitors

Check on Google Search :

• What others are charging
• What customers are used to paying

Don’t copy blindly, understand the range

Step 4: Understand Your Customers

Ask:

• Can they afford your price?
• What value are they getting?

Pricing is not just numbers, it’s perception

Step 5: Use Smart Pricing Strategies

• Penetration Pricing (For Beginners): Start slightly lower to attract customers
• Value-Based Pricing: Charge based on value, not just cost
• Bundle Pricing: Combine services: Example: POS + airtime + bill payments

More value = more income

Before you embark on any business, Ensure to carry out a feasibility report, Read my Detailed guide on How to carry out a Winning Feasibility Report

Frequent Pricing Mistakes

• Copying competitors blindly
• Ignoring hidden costs
• Pricing too low out of fear
• Changing prices too often

How to Increase Profit Without Losing Customers

1. Improve Your Service
   Better service = customers accept higher price

2. Add Extra Value

• Faster service
• Better customer experience

3. Build Trust: Customers pay more where they trust

Real-Life Example

Two POS agents charge differently:
Agent A charges very cheap, low profit
Agent B charges slightly higher, better service
Customers still choose Agent B
Why?
Value is greater than Price

Conclusion

Pricing is not about guessing.
It’s about strategy.
Set your price based on:

• Cost
• Value
• Market demand

Do it right, and your business becomes more profitable.

Frequently Asked Questions (FAQs)