Start a Business 4: Price and Budget
Understand basic pricing, costs, cash needs, and the difference between revenue and profit.
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Pricing should cover more than the visible cost of producing a product or service. Start by listing direct costs, such as materials, platform fees, delivery, or contractor time. Then consider the time you spend communicating with customers, correcting work, marketing, managing records, and operating the business. A price that produces sales but cannot support the work is not sustainable. Create a simple monthly budget with expected revenue, fixed costs, variable costs, and a small allowance for unexpected expenses. Keep personal and business records separate when possible. Do not confuse revenue with profit. Revenue is the money the business receives. Profit is what remains after the relevant expenses are paid. Early estimates will be imperfect, so compare them with actual results and adjust. Pricing is also connected to positioning. A faster, more specialized, or more reliable service may justify a different price from a basic alternative. The goal is not to charge the highest number possible. It is to create an offer whose price makes sense to the customer and can support reliable delivery.