How to Price Your Products for Maximum Profit

Pricing is where many Nigerian small businesses accidentally work for free. You add a "little markup" without counting delivery to the customer, gateway fees, staff time, or the discount you will inevitably give Uncle Tunde.

Profitable pricing starts with knowing your true cost per unit, then choosing a strategy that fits your market — not copying the lowest seller on Jiji.

Step 1 — Calculate true cost (cost-plus foundation)

List every naira that goes into getting one unit to a paying customer:

• Product cost (supplier, import, production)
• Packaging (poly mailer, box, tape, thank-you card)
• Inbound delivery to your shop or warehouse
• Outbound delivery subsidy (if you offer "free" shipping, it is still a cost)
• Payment gateway fee (~1.5% + fixed amount)
• Staff time to pick, pack, and handle returns (estimate per order)
• Shrinkage — damage, theft, wrong sizes (add a small buffer)

Formula: True Cost = direct costs + allocated overhead per unit

If true cost is ₦6,200 and you sell at ₦7,000, you are not running a business — you are running a charity with extra steps.

Step 2 — Choose your pricing strategy

Cost-plus pricing

Add a target margin on top of true cost. Example: 40% margin on ₦6,200 true cost → ₦8,680 selling price. Simple and safe for commodities with stable demand.

Competitor-based pricing

Benchmark similar products online and offline. Price within range unless you justify premium (better fabric, faster delivery, stronger brand). Never race to the bottom — the cheapest seller often has the thinnest margin and first cashflow crisis.

Value-based pricing

Price what customers willingly pay based on perceived value. Fashion brands, customised goods, and urgency-driven categories (event wear, gifts) support higher margins if storytelling and photos match the price.

Psychological pricing in Nigeria

₦4,999 often outsells ₦5,000. ₦19,500 feels materially cheaper than ₦20,000. Test on hero SKUs for two weeks and compare conversion — not just revenue per unit.

Discounts without destroying margin

Discount only with a goal:

• Clear slow inventory before a new season
• Acquire first-time customers with a capped promo code
• Bundle slow + fast movers together

Permanent "sales" train customers to never pay full price. Track discount percentage in reports — if it exceeds 15% of gross sales, your list prices may be wrong.

Shipping and "free delivery" math

If competitors offer free Lagos delivery, bake average delivery cost into product margin for Lagos buyers or set a minimum order value. Oshop247 lets you configure free delivery thresholds — use them deliberately.

Updating prices on your store

When costs rise (FX, fuel, supplier hikes), update prices in Oshop247 admin. If you use POS, online and in-store update together. Communicate major changes honestly on social — customers understand more than silent price jumps at checkout.

Review pricing quarterly

Check gross margin by category. Kill products that sell fast but profit little. Double down on high-margin bestsellers with better photos and ads.

Revenue is vanity; profit is sanity. Price for sustainable profit, not Instagram likes on your "cheap cheap" post.