Price too low and you work for nothing; too high and you lose sales. This guide covers cost-based and value-based pricing, margins, and how to test a price.
Published July 2026 · Updated July 2026
Work out the true cost of delivering each product or service, including materials, time and a share of overheads. This is your floor, price below it and you lose money on every sale.
Cost-plus adds a target margin on top of cost, simple and safe. Value-based pricing sets the price on what the outcome is worth to the customer, which can be far higher for services. Most businesses blend the two.
Markup is profit as a percentage of cost; margin is profit as a percentage of the selling price. They are easy to confuse and the difference matters: a 50% markup is only a 33% margin. Our calculators work out both.
Prices are not permanent. Try a change on part of your range, watch how demand and profit respond, and adjust. Small, informed increases often add more to profit than chasing extra volume.
An item costs you £50 and you want a 60% markup:
Use them as a reference, not a rule. Your costs, quality and the value you deliver may justify pricing above or below them.
Markup is profit over cost; margin is profit over selling price. A 50% markup equals a 33% margin. Our calculators show both instantly.
At least yearly, and whenever your costs move. Small regular adjustments are easier for customers than rare big jumps.
This guide is general information for UK small business owners, not accounting, tax or legal advice. Rules, rates and thresholds reflect 2026/27 and change over time; always check the linked official source or a qualified adviser for your situation.