“How much should I charge?” is one of the most common questions small shops face. Too high and customers leave, too low and there’s no profit left. This article covers how to price products for profit with a method, not a guess.
Rule one: know your “per item cost” first
You can’t price for profit if you don’t know what one unit costs you. Per item cost comes in two forms:
- Buy and resell shops: cost = the price you bought it at (e.g. a snack bought at ฿8 a piece)
- Make it yourself shops (coffee / food): cost = all ingredients combined per unit
Example, the cost of one iced coffee:
| Ingredient | Cost |
|---|---|
| Coffee beans | ฿6 |
| Milk | ฿5 |
| Cup + lid + straw | ฿3 |
| Ice + syrup | ฿2 |
| Total cost per cup | ฿16 |
The simple pricing formula (markup on cost)
The easiest way is to price from cost and add the profit you want:
Selling price = per item cost × multiplier
The multiplier that drink and food shops commonly use is 3× (to cover rent, labour, and electricity that aren’t in the ingredient cost):
- Coffee at ฿16 cost × 3 = price around ฿45 to ฿50
Why 3× and not 2×? Because “gross profit” (price − ingredient cost) still has to cover rent, electricity, and labour. At only 2× there’s often nothing left after those (read more: How to calculate shop profit).
Another way: price from “the profit you want”
If you want a clear gross profit percentage, use this formula:
Selling price = cost ÷ (1 − desired profit %)
For example, to get a 60% gross profit on a ฿16 cost: 16 ÷ (1 − 0.60) = 16 ÷ 0.40 = ฿40
Don’t forget to check the “market price”
The formula tells you the minimum price you should set, but the real price has to consider the market too:
- What does the shop next door charge?
- What price can our customers accept?
- Does our product have something that justifies a higher price (taste / packaging / service)?
If the formula says ฿50 but the market sells at ฿40, the answer is to lower your cost (find cheaper ingredient sources), not to force a loss making sale.
Track per item profit automatically
Once you’ve set prices, the next step is to track your real per item profit after selling. A tool like Posless lets you store products with their selling price + cost, so when you sell it tells you the per item profit instantly, and you can snap purchase receipts to update costs easily in LINE. You’ll see clearly which items earn well and which need a price adjustment.
FAQ
Q: What markup percentage should I add? A: Buy and resell shops often add a 20 to 50% gross margin, while make it yourself shops (drinks / food) typically use around 3× the ingredient cost, to cover rent, labour, and electricity.
Q: I priced it but it’s not selling. Should I cut the price? A: Before cutting, check whether there’s still profit after the cut. Cutting into a loss makes things worse. A better route is to find ways to lower cost, or add value so you can keep the price.
Q: How do I find the per item cost of a menu I make myself? A: Add up every ingredient used per unit. If you buy by the pack, divide down to a per item price first (e.g. 100 cups for ฿300 = ฿3 each).
In short: to price for profit, start by knowing your per item cost → add profit with a formula (×3 or the percentage formula) → check it against the market, then keep tracking real per item profit to fine tune.