Choose the unit
Define exactly what one sale means: one candle, one hamper, one meal, one client deliverable or one subscription month. Costs cannot be compared consistently until the unit is clear.
- Use the quantity customers actually buy
- Include all items delivered in that sale
- Use the same unit when setting price
Add direct materials and packaging
List the quantity and cost of every material consumed by one unit. Add primary packaging, labels, inserts and protective shipping materials. Include normal wastage when the process reliably creates it.
Simple example
For a candle, wax and fragrance are not the whole cost. The vessel, wick, label, box, filler and expected test wastage also belong in the estimate.
Include transaction and delivery costs
Add costs that occur because the sale happened: payment fees, marketplace commission, shipping subsidy, pick-and-pack charges and any delivery labour that scales with orders.
- Use fee percentages against the expected selling price
- Allocate multi-unit shipping across the order
- Do not assume the customer always pays the full delivery cost
Treat labour deliberately
If production or delivery time grows with each sale, include a realistic labour allowance. Ignoring founder time can make a handmade product or service appear profitable when it cannot support consistent delivery.
- Time a small real batch
- Include finishing and packing
- Use a sustainable hourly value rather than zero
Keep fixed costs separate
Equipment, annual software, rent and one-time setup are usually fixed costs. Do not add the full amount to one unit. Use contribution per sale to understand how many units are needed to recover those costs.
- Update variable ideas to test after real sales
- Run a conservative and expected scenario
- Check whether the final price still makes sense to the customer