Pricing is a part of strategic planning in any business. You need to know what to charge for your products or services in order to reach the business bottom line. It means walking a thin line between covering material cost and expenses that results in the product to make a reasonable profit and not pricing so much that customers are compelled to look elsewhere.

The price for your product or service should include expenses such as cost of production, employees, materials, marketing, training and so on. Remember that you are not a non-profit agency to cover only for the expenses incurred in running the business. This is not a past-time hobby that you do for your own enjoyment either. The employees need to be paid on time, materials need to be procured and payments need to be made to vendors and suppliers. Then there are expenses related to the time when employees are non-productive, especially during their training period. There is also cost associated with paying bonus, furnishing, machinery and much else. You need to set a price for the items you are selling in such a way that the profit is decent. This means finding the balance between the expenses involved and what customers are willing to pay for that product or service.

There is no exact percentage of profit that you should be making. Nor there are any magic formulas that will tell you how much is a decent profit. It varies from one industry to another. The higher the need for skill and workmanship, the higher the price. For example, an accountant or banker may charge more compared to a gardener or housemaid. Then there are different ways that you can charge for the work to be done.

Hourly rate is used for labor intensive jobs such as consultancy and legal services. Unit pricing is the standard form of pricing where the work is repetitive and pre-determined. Large projects call for charging by the job. Here, the customers only pay after the project is done. Contingency based pricing is a way to charge customers for the job based on performance. For instance, lawyers use this scheme when they win the case for their clients.

There are many software and helpful resources like this site that you can use to determine various pricing for your product or service. This will let you fix a cost for certain products or make it variable when the job is flexible in nature. You can also combine one or more ways of pricing for your services. For instance, a project can be charged by the job and any additional service can be charged based on hourly rate. Similarly, you can charge contingency-wise or set a fixed unit price for various legal services that you offer.

Nevertheless, know your margins well. Adjust pricing on a regular basis if need be. You may also set your price high if additional perks are offered to customers, such as guaranteed quality, free shipping, 5-year warranty and so on.