Setting Your Prices as a Small Business

Setting prices is one of the most important decisions for a small business, yet many shop owners do it almost by guesswork, mostly watching what the neighbour charges. A poorly calculated price can quietly lose you money without you noticing right away. Here is a simple method to set prices that cover your costs and stay competitive.

Calculate your cost price first

Before setting any price, you need to know your real cost price. For each product or service, add up:

• The purchase price or the cost of raw materials.
• Transport and logistics to your point of sale.
• A share of your rent and fixed costs, spread across every item you sell.
• A share of staff wages if you employ anyone.
• The usual losses: expired, damaged or unsold stock, which exist in almost every shop.

Many shop owners in Dakar, Parcelles Assainies or Grand Yoff skip that last line and set a price that barely covers the purchase, with no real margin.

Add a realistic margin

Once you know your cost price, add a margin that lets you actually live off your business and grow it, not just pay back your purchases. That margin varies by sector: it is often lower on fast-moving essentials and higher on more specific or harder-to-find items. Start with a theoretical price based on the margin you want, then check it against the real market before putting it on display.

Look at local competition without copying it blindly

Checking prices in your own neighbourhood, whether in Sacré-Cœur, Liberté 6 or Pikine, gives a useful reference point, but copying a neighbour's price without knowing your own cost price is risky: if your rent, transport or purchasing terms differ, the same price can be profitable for them and a loss for you. Use competition as information, not as an absolute rule.

Displaying prices and running promotions

Clearly displayed prices reassure customers and avoid endless haggling on every sale. When you run a promotion, keep the discounted price above your cost price: selling at a loss to draw a crowd often costs more than expected, especially if the promotion runs for several weeks. Also consider a separate rate for delivery, which has a real cost in time, fuel or a delivery person's fee.

Reviewing your prices regularly

Costs change over time: purchase prices, transport, rent. Get into the habit of reviewing your prices every quarter, or sooner if a cost rises sharply, rather than waiting until you are in trouble. Warning loyal customers ahead of a price increase, with a simple explanation, is usually better received than a sudden, unexplained change.

Recommended addresses on SeneFinder

No listing is attached to this article: check the search Services in Dakar on SeneFinder to find accountants or advisors who can help you refine your price calculations.

You can also see all addresses in this category or explore the Dakar directory to compare other professionals.

Useful tools

• The FCFA currency converter to compare a price with another currency.
• List your business for free on SeneFinder to gain visibility with new customers.
• Our article on keeping customers loyal to a business in Senegal.
• Our article on writing a clear quote as a tradesperson, useful for custom work.

Frequently asked questions

How do I calculate my cost price simply?

Add up the purchase price, transport, a share of rent and fixed costs, a share of wages and an estimate of usual losses, for each item you sell.

Should I always match the prices in my neighbourhood?

No: local competition is a useful reference, but your price must first cover your own cost price, which can differ from a neighbour's.

How often should prices be reviewed?

Reviewing them every quarter is a good rhythm, adjusted sooner if an important cost, such as transport or rent, rises sharply.