You’ve made something. Maybe it’s a candle, a template pack or a one-hour coaching call. Now you’re staring at an empty price box, and your brain is yelling two things at once: “What if it’s worth ten times this?” and “What if nobody pays a cent?”

Here’s the honest truth, Tribe: nobody knows what a brand-new product is worth until real buyers react. But you don’t have to guess in the dark. You need a method. This guide shows you how to price your first product in five steps: work out your costs, put a price on your time, check the competition, pick a first price, then run a simple price test. The arithmetic works in dollars, pounds, euros or any other currency, and whether you sell through Shopify, Etsy, Gumroad, Square or a PayPal invoice. Every number labelled illustrative is made up to show the maths, not a statistic. We got this.

Step 1: Find Your Cost Floor

Your cost floor is the lowest price that doesn’t lose you money. Everything else in this guide sits on top of it.

The U.S. Small Business Administration tells new owners to list every expense before launch, from equipment and supplies to insurance, advertising and a website, then sort them into one-time and monthly costs¹. Do the same, then split the list again. Stripe’s pricing guide separates variable costs (materials, direct labour, packaging, shipping) from a share of fixed costs (software subscriptions, equipment) spread across the units you expect to sell².

Don’t forget the sneaky overhead. Canada’s BDC warns that if overhead isn’t built into your price, you can end up losing money even though revenue is coming in³. Taxes belong on the list too: Australia’s business.gov.au includes taxes, such as GST, among the costs to count when you set a price⁴. Sales tax, VAT and GST rules differ from country to country, so check how yours treat your price. (General information only, not legal or tax advice.)

Here’s our illustrative side hustle: a hand-poured candle sold online. All numbers are invented for the maths.

• Materials: $3.50
• Jar and packaging: $2.00
• Shipping supplies and an estimate of per-sale platform fees: $1.00
• Variable cost per candle: $6.50
• Fixed costs (website plan, small tools): $60 a month, including a small buffer for surprises

That buffer matters. The SBA suggests adding a little extra, say 10%, to cover costs you can’t predict¹. Your floor isn’t done yet, though, because so far there’s one cost missing: you.

Step 2: Put a Price on Your Time

Here’s where first-timers leak money: they price the product and forget the person making it. New Zealand’s business.govt.nz defines profit as what’s left after you’ve paid for all your business costs, materials, labour costs and yourself⁵.

So what’s your hour worth? The same guidance, written for tradespeople but with logic that travels, suggests starting with the rate you’d earn in a similar salaried job and adding at least 20%, to cover things like holidays and sick leave that a salaried role would otherwise handle⁵.

Back to the candle, with illustrative numbers:

• A comparable salaried job pays $20 an hour (illustrative).
• Add 20%: your starting rate is $24 an hour.
• One candle takes 30 minutes of hands-on time: $12.00 of labour.
• Your share of fixed costs: $60 ÷ 20 candles a month = $3.00 per candle.

Add it up: $6.50 + $12.00 + $3.00 = $21.50. That’s the true cost floor for one candle, and it’s far higher than the $6.50 you’d get from counting materials alone.

The New Zealand guidance adds a disciplined habit worth stealing: track how long each job really takes, because that makes you better at pricing the next one⁵. Time your next three batches with a stopwatch. Your gut feeling may be off.

Step 3: Check the Competition (Without Copying It)

Now lift your head and look around. The SBA’s market research checklist includes a pricing question that’s worth taping to your monitor: what do potential customers pay for these alternatives?⁶ Its competitive analysis guidance also reminds you to include indirect competitors, the ones that overlap with your offer without matching it exactly⁶.

Where do you find prices? The UK’s Start Up Loans guidance points to competitors’ own websites, third-party marketplaces such as Amazon, eBay and Etsy, and, for service businesses, downloadable rate cards⁷. Open ten tabs. Be curious about why each seller charges what they charge.

Then record three direct competitors in a simple list. Illustrative candle sellers:

• Seller A: $24, plain jar, one scent
• Seller B: $29, matching gift box, six scents
• Seller C: $36, premium glass and fast shipping

Australia’s business.gov.au says to use competitor prices as a guide, not to copy them exactly, and to compare what customers value beyond price, such as product features, quality and customer service⁴. And don’t panic-undercut. The Start Up Loans guidance cautions that low prices can suggest poor quality or value, and that you shouldn’t price below what it costs to produce⁷.

Our illustrative market range is $24 to $36. Notice what’s happening: you now have a floor (your $21.50) and a visible neighbourhood. Treat those competitor prices as data, not as verdicts on your worth. That’s the Stoic move.

Step 4: Pick Your First Price

You’ve got boundaries. Now choose a number inside them.

Stripe describes a hybrid approach: use cost-based pricing to set your floor, use the value your customer gets to set your ceiling, then choose a price between the two². Its cost-based formula is simple: selling price = cost + (cost × markup)².

Run it on the candle with an illustrative 40% markup: $21.50 + ($21.50 × 0.40) = $30.10. That sits inside the $24 to $36 market range, so call it $30.

Why not just stop at cost-plus? Business Wales, the Welsh Government’s support service, notes that many start-ups lean on cost-plus because it’s simple, but it ignores demand and how price-sensitive customers are⁸. Harvard Business Review’s Utpal Dholakia wrote in 2016 that value-based pricing is widely discussed yet widely misunderstood, and that the confusion pushes companies back to cost-based methods that leave money on the table⁹. So give the value side a quick check before you commit. Stripe frames value as time saved, revenue earned, convenience gained or risk avoided, and for consumer products, the experience it provides and the need it replaces². A candle someone gives as a gift is solving a “what do I bring?” problem.

Better still, ask real people. Business.gov.au suggests showing your product to a sample of customers and asking what they want, which features matter most and how much they spend on similar products⁴. Talk to five people this week.

One more sanity check: break-even. The Bahamas Small Business Development Centre gives the formula as fixed costs divided by contribution margin, which is price minus variable cost per unit¹⁰. At $30, and counting your time as a cost, each candle contributes $30 − $18.50 = $11.50. Then $60 ÷ $11.50 is about 5.2, so you need 6 candles a month to cover fixed costs and pay yourself $24 an hour (all illustrative).

Courage check: don’t choose the price that makes you feel safest. Choose the one you can explain. If you’d like a different angle on the same fear, we’ve also written a mindset-first take on setting your first price.

Step 5: Run a Simple Price Test

Your first price is a hypothesis, not a tattoo. Stripe describes a pricing experiment as a controlled setup where everything except the price stays the same, so you can see what customers actually do¹¹. Its advice for running one is refreshingly practical:

• Change one thing. If your product or a marketing campaign changes at the same time, you won’t know what moved the result¹¹.
• Write a falsifiable hypothesis first, naming the variable and the metric you’ll judge it on¹¹.
• Set success criteria and a stop rule in advance, such as stopping early if revenue collapses¹¹.
• Be patient. A handful of sign-ups proves nothing, and Stripe notes many pricing tests need weeks to produce meaningful results¹¹.

Now get creative and make it small enough for a side hustle. Say you test $30 (your control) against $34 (the test) for new customers only. The illustrative maths: at $30 each candle contributes $11.50 after your time and costs; at $34 it contributes $15.50. So 8 sales at $34 earn more than 10 sales at $30, since 8 × $15.50 = $124 beats 10 × $11.50 = $115. You can afford to lose a few buyers and still come out ahead. Run your own numbers before you start, so the result decides the price instead of your mood.

Two cautions from the same Stripe guide. Splitting buyers by time or region is easier for small sellers, but it exposes your test to seasonality and competitor moves, so read the result as a clue, not proof¹¹. And pricing is visible: people talk, so some businesses frame tests as limited-time offers to soften any sense of unfairness¹¹.

When the test ends, don’t treat it as a final verdict. Business.gov.au recommends reviewing your prices at least once a year, or whenever your costs or market conditions change⁴. If you do raise prices, BDC suggests explaining the reasons to customers personally, because they won’t be thinking about your costs³. A test that comes back “no” isn’t failure. It’s cheap information, and that’s exactly what a first price is for.

Your Move

Five steps, one loop: find your cost floor, price your time, check the competition, pick a first price, test it. You don’t need certainty to start. You need a number you can defend and the discipline to learn from what happens next.

Here’s your mission this week:

1. Write down every cost, then calculate your true cost floor, time included.
2. Find three competitors and note their prices and what buyers get for them.
3. Pick a first price and write one sentence explaining why.
4. Put a hypothesis and a stop rule on paper before you test.

Once sales start rolling in, keep the habit going with our guide to tracking every dollar in your side hustle. The Side Hustle Tribe exists to help 1,000 ambitious people turn their side hustles into main hustles by 2028, and pricing is one of the first big decisions on that road. Time to crush it. Ready for your next rep? Launch Your Hustle →

Where the numbers come from

Every figure and claim above that isn’t marked illustrative is named in the text and numbered here. All dollar amounts in the worked example are made-up numbers for the arithmetic, not statistics.

1. U.S. Small Business Administration, Calculate your startup costs, U.S. Small Business Administration, 2026. sba.gov
2. Stripe, Cost-based and value-based pricing: What works, when, and why, Stripe, 2025. Company-published guide (Stripe sells payment tools). stripe.com
3. BDC (Business Development Bank of Canada), How to set the right price for your products or services, BDC, 2023. bdc.ca
4. Australian Government, Choose a pricing strategy, business.gov.au, 2026 (undated page, read 3 October 2026). business.gov.au
5. New Zealand Government (MBIE), How to price a job (Tips for tradies), business.govt.nz, 2025. business.govt.nz
6. U.S. Small Business Administration, Market research and competitive analysis, U.S. Small Business Administration, 2026. sba.gov
7. The Start Up Loans Company (British Business Bank programme), How to price your products and services, Start Up Loans, 2025. startuploans.co.uk
8. Welsh Government, Pricing, Business Wales, 2025. businesswales.gov.wales
9. Utpal M. Dholakia, A Quick Guide to Value-Based Pricing, Harvard Business Review, 2016. Foundational article; only the opening was readable without a subscription. hbr.org
10. Small Business Development Centre (Bahamas), Break-Even Analysis, SBDC Bahamas, 2020. sbdcbahamas.com
11. Stripe, Pricing experiments: A guide for businesses, Stripe, 2025. Company-published guide (Stripe sells payment tools). stripe.com