How to Stop Pricing from Fear And Start Pricing with Clarity
(…and why tracking COGS is the missing link in your pricing strategy)
Most business owners start pricing with their gut. You look at competitors, go with what sounds “fair,” or undercharge out of fear that no one will pay more. And it works…until it doesn’t.
Your COGS Isn’t Fixed. It’s a Moving Target.
COGS (Cost of Goods Sold) include every direct cost that goes into delivering your product or service:
- Inventory or raw materials
- Packaging + outbound shipping
- Merchant fees (tied to each sale)
- Labor directly fulfilling an order or service
But here’s what most people miss: COGS is often variable. The more you sell, the more it costs. And those costs don’t always stay the same.
That’s why you can’t “set it and forget it.” Every month, it is crucial for you to look at the current month, the prior month, and the prior year, to see what has changed and by how much.
Why Tracking COGS Trends Matters
Let’s say your shipping costs quietly increased 15% in Q1, and your vendor raised prices in Q2. If you’re not watching those shifts, you’re probably:
- Eating the cost unknowingly
- Cutting into your margins
- Blaming your cash flow when it’s really your COGS
When you track COGS monthly (or even weekly during high seasons), you’ll catch the patterns:
- Seasonal fluctuations in materials or labor
- Inventory loss, spoilage, or shipping errors
- Hidden fees or processing rate changes
- Vendor costs rising without notice
Tracking = clarity. Clarity = Confidence. Confidence = Data Informed Pricing
Gut + Data = Scalable Confidence
Your intuition is valuable. But data is your anchor. When you combine your instincts with actual COGS trends, you can:
- Raise prices when fulfillment gets more expensive
- Forecast your margins over seasons
- Avoid unexpected cash flow dips
- Adjust packaging, vendors, or delivery to reduce costs
It’s not about “charging more just because.” It’s about protecting your profit and your peace. COGS is tax-deductible, but only when categorized correctly. Misclassify them as overhead and you miss out on deductions that reduce your gross income, which is where your tax bill starts.
How to Build COGS Into Your Pricing
- Identify your direct costs per product or service
- Track those costs monthly, especially shipping, supplies, and labor tied to fulfillment
- Adjust pricing when variable costs increase
- Add your overhead and desired profit on top (EPI Formula)
- Revisit monthly so you’re never surprised
Final Thoughts from Your Favorite Bookkeeper 🧡
You didn’t start this business to feel broke or burnt out. But if you’re not tracking the cost to fulfill your offer, you’re leaving your pricing strategy up to luck.
Want help calculating your COGS and setting pricing that actually works?
✅ Work with our team of certified QuickBooks Bookkeepers
📚 Prefer to DIY? My workbook walks you through how to calculate COGS and set up a pricing strategy that connects gut with data.
👉 Because at the end of the day, cash flow isn’t luck, it’s strategy.
