CHAPTER 7 GUIDE
Pricing and the Numbers
In short
Most people start a shop because they like making or finding things. Very few start one because they love spreadsheets.
The numbers bot
Give it a spreadsheet to work in, or let it make one. Keep it simple.
What a product really costs
For each product, the full cost to you is more than the material or the supplier's price. It's usually:
- The cost to make or buy one item, from Chapters 3 and 4.
- Packaging.
- Payment processing fees, usually a percentage plus a small fixed amount.
- Platform or marketplace fees.
Margin, in plain words
Margin is what's left from the price after all the costs, usually shown as a percentage of the price. If you sell something for $20 and it costs you $12 in total, your profit is $8 and your margin is 40%.
Setting the price
The price is your call. The bot can give you information:
- Your cost and margin at different prices.
- What similar products sell for, from the research bot.
- How your price compares to what customers seem to expect.
Watching for changes
Costs change. Filament goes up.
The monthly summary
Keep it short. One page you read beats five you don't.
Taxes
Sales tax is one of the areas where the US and Canada differ most, and where small sellers often get caught out.
Income tax and bookkeeping
Profit from a side hustle is usually taxable income. How it's taxed, what you can deduct and how you report it differ by country.
Walkthrough: pricing the cable organizer
Here's how the Shelf Life owner set a price. The numbers are round examples to show the method, not real costs.
What went wrong: the free shipping promotion
For a holiday weekend, the owner offered free shipping on everything. Orders jumped.
A worked example: the year-end folder
In January, the Shelf Life owner asked the numbers bot to put together a year-end folder for their accountant. It collected every sales report, receipt and supplier invoice that had been filed by month, and wrote a one-page summary of totals.
Questions people ask
What margin should I aim for? I won't give you a number, because it depends on your product, your volume and what your time is worth.
What went wrong: the currency mix-up
The Shelf Life owner buys some supplies in US dollars and sells in Canadian dollars. In the first cost sheet, the bot mixed the two, and some margins looked much better than they were.