One of the biggest challenges for business owners is figuring out how to price their offers.
In reality, it's not too complicated. There's 2 main ways.
You can have a "Price-shopped" or "Results-shopped" offer.
"Price-Shopped" items are like commodities - "things" (ex: milk). People buy "things" wherever they find the lowest price. Period.
If something is heavily price-shopped, offer a bigger package. Refuse to compete on a commodity basis. If everyone is selling a gallon of something for $1.80, don't sell single gallons alone. Pack five gallons together at an incredible price -- a price where you can get a purchasing advantage in quantity, and one you can use to make a good profit while offering your customers superb value.
"Results-shopped" items are different. Clients are looking for an end result, a certain sense of fulfillment or inner satisfaction. Plus, you’ll have more flexibility and a better chance to make a nice profit when setting your prices this way.
My recommendation is to always try to move your business toward the "results-shopped" business category and away from the "price-shopped" crowd.
When it comes to determining costs, study your competitors or market value for what you offer. There's no solid answer because you have to keep testing, testing, testing to figure out what prices work and what don't...what's overpriced or underpriced.