You know how much you spend making your product. But does that mean you know how much you should sell it for?
Many small business owners confuse costing with pricing. While they work together, they answer two very different questions.
First, What Is Costing?
Costing tells you how much you spend to make a product.
Let’s say you sell iced coffee. Here’s what one cup costs you:
| Expense | Cost |
|---|---|
| Coffee, milk, and syrup | ₱40 |
| Cup, lid, and straw | ₱8 |
| Labor | ₱12 |
| Production overhead | ₱10 |
| Total Product Cost | ₱70 |
So, making one iced coffee costs you ₱70.
But should you sell it for ₱70? Definitely not if you want to earn a profit!
Now, What Is Pricing?
Pricing is deciding how much your customers should pay for your product.
Unlike costing, pricing considers more than expenses. Think about:
- How much profit you want to earn
- What your competitors are charging
- What customers are willing to pay
- What makes your product valuable
For example, your iced coffee costs ₱70 to make, but you decide to sell it for ₱120.
That’s a ₱50 gross profit per cup, before other business expenses.
Costing vs. Pricing: The Simple Difference
| Costing | Pricing |
|---|---|
| How much does it cost me? | How much should I charge? |
| Focuses on your expenses | Considers expenses, profit, and customer value |
| Helps you understand costs | Helps you make selling decisions |
Think of it this way: Costing helps you understand your numbers. Pricing helps you decide what to do with them.
Why Does This Matter?
Imagine selling 100 cups of coffee at ₱120 each.
Sounds great, right?
But what if you forgot to include packaging, labor, or electricity in your original calculations?
Your actual profit could be much lower than you expected.
And here’s another thing: even if your costing is accurate, your selling price might still be too low for your business goals—or too high for your target customers.
That’s why good pricing starts with understanding your costs.
Cost Better. Price Smarter.
Before you launch a product or change your selling price, ask yourself:
- Do I know my actual product costs?
- Will my selling price leave enough room for profit?
- What happens if my material costs increase?
You don’t need to be a finance expert to start answering these questions.
With Kostaraa, you can organize your materials, calculate product costs, and evaluate your target selling prices—all in one place.
Because running a business shouldn’t mean guessing your numbers.
Know your costs. Understand your margins. Make smarter decisions.
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