If you’ve ever found yourself thinking “I just want to make enough to live on!” or “I have no idea how much to charge…” — you’re not alone. Most solopreneurs, freelancers and creatives are working so hard in the business, they never get the chance to step back and look at the business.
Let’s change that.
This post isn’t about spreadsheets or scary jargon. It’s about how to use a simple, smart business triangle — People, Product, and Price — to make your business work for you.
The Pricing Triangle: People, Product, Price
Before we get into profit margins and business costs, let’s look at the foundation of any sustainable small business:
- People – Your ideal customers
- Product – What you offer (physical products, digital downloads, services, workshops …)
- Price – What you charge, and how that number makes your business viable
If one point of that triangle is off balance, the business wobbles.
- Right product, wrong people = no sales
- Right people, wrong price = no profit
- Right price, wrong product = no repeat customers
When all three are aligned? You’ve got a business that sells with ease and earns with purpose.
CHECK THIS OUT: How to Create the Perfect Product and Pricing Strategy for Your Business
Let’s Talk Profit
Profit isn’t just what’s left over, it’s what keeps your business alive. Without it, you’re not running a business; you’ve got a hobby with admin (and maybe a few pounds coming in now and then).
But what actually is profit? Let’s look at the equation:
Revenue (what you earn) – Costs (what you spend) = Profit (what you keep)
Sounds simple, right? But the devil’s in the detail, especially if you’re a team of one.
Understanding Your Costs
Small businesses have real costs and they’re not always obvious.
Fixed costs – these stay the same no matter how much you sell, for example:
- Insurance
- Website hosting
- Rent (if you have a workspace)
- Accounting software
- Your own salary (yes, that’s a cost!)
Variable costs – these go up and down depending on what you sell:
- Materials and packaging
- Postage or delivery fees
- Transaction charges
- Freelancers or suppliers you use
TOP TIP: Don’t forget your time! Even if you’re not invoicing yourself, your hours have value and should be built into your pricing.
CHECK THIS OUT: The Art of Pricing: Take the Emotion Out of Your Creative Business
What Is a Profit Margin and Why Should You Care?
A profit margin is the percentage of each sale that’s actually profit.
Let’s say you sell a handmade product for £100. It costs you £60 in materials, packaging, and delivery. Your profit is £40, so your profit margin is 40%.
The bigger your margin, the more buffer you have for:
- Unexpected expenses
- Growth plans
- Paying yourself properly
Applying ‘Big Business’ Thinking to Your Business
You don’t need a finance department to get this right. You just need to think like a business owner.
Here’s how:
1. Know Your Numbers
Start with what you need:
- Personal salary goal (e.g. £2,000 per month)
- Business running costs (e.g. £1,500 per month)
That £3,500 each month is your minimum income target. Now divide £3,500 by the average price of what you sell. That will tell you how many sales (or billable hours) you need to make to cover your costs and pay yourself.
2. Work Back from Profit
Let’s say you want a 50% profit margin. That means your costs cannot be more than half of your sale price.
Let’s put that into a real-case scenario.
If you’re selling a craft workshop for £60 per head you can only send £30 per head to deliver it. All your costs have to be accounted for – venue, refreshments, materials, marketing and promotion, travel expenses, your hourly rate (and remember it’s not just the hours you spend delivering, but the hours preparing in advance and the set-up and tidy-up time too).
3. Use the Product Staircase
Not everyone will buy your top-tier offer. The answer? Create smaller steps:
- Step 1: an entry-level digital download; Step 2: a mid-tier workshop; Step 3: a one-to-one offer
- Step 1: low-cost / mass-produced accessories; Step 2: a limited edition handmade item; Step 3: bespoke commissions
This approach gives your customers ways to engage at their budget level while giving you flexibility in how you price and promote.
4. Price for Profit, Not Panic
Make this your mantra …
“I am allowed to make money. I am supposed to cover my costs. I am entitled to be paid for my time, skills and experience”
Final Thought: Profit Isn’t a Dirty Word
Profit gives you choices. It gives you time, space, and the ability to keep going. It’s not about being greedy, it’s about building something sustainable.
If you’ve been plucking prices out of thin air or trying to guess what people will pay STOP!
There’s a better, smarter and more profitable way. And, if you want to know what that is specifically for you and your business, Let’s Talk and have a conversation about the numbers in your business.