Most people who undercharge do it for one of two reasons.
The first is that they genuinely do not know what their costs are — they have not added everything up, including the hidden things, and so they guess. The guess is always too low.
The second is that they are afraid. Afraid the customer will say no. Afraid they are not worth it yet. Afraid that charging properly somehow makes them greedy or arrogant.
Neither of these are accounting problems. But the accounting is where we start, because getting the numbers right removes a lot of the fear.
**The formula:**
Cost + Labour + Profit Margin = Selling Price
That is it. That is the whole thing.
**Cost** is everything it takes to make or deliver your product or service. And I mean everything — including the things people forget. The packaging. The data you use to take the order. The transport to deliver it. The proportion of your phone bill that goes toward running the business. The time you spend on admin and messages, not just on making the thing.
Write all of it down. Add it up. That is your floor — the minimum you need to cover before you have made a single rand of profit.
**Labour** is your time, valued at an hourly rate you decide. If something takes you two hours to make and you value your time at 80 an hour, your labour cost is 160. This goes into the price. Not as a bonus — as a cost. Your time is not free, even when it feels like it is.
**Profit margin** is the money left over after costs and labour. This is what grows your business, covers your slow months, replaces equipment, and eventually gives you the breathing room to work less and earn the same. Aim for at least twenty to thirty percent. If that feels uncomfortable, ask yourself what you would say to a friend who told you they worked for free a third of the time.
**The hidden costs most people miss:**
- Their time responding to enquiries that don't convert
- Returns, mistakes, and do-overs
- The cost of acquiring each customer (even if that cost is just your time on social media)
- Tax — set aside at least twenty percent of every payment before you spend anything
**A note on raising your prices:**
You will undercharge at first. Almost everyone does. That is fine — it is how you learn what the market will bear and build confidence in what you offer. But revisit your pricing regularly. Every time your skill improves, every time your demand increases, every time you realise your costs have crept up — look at the numbers again.
The goal is a business that is sustainable for you. Not just for your customers.
*Next: the free tools that can run almost every part of your business — so you can stop using "I don't have the budget" as a reason not to start.*