How much should I mark up my COGS? - Pricing for Profit Intro II

I've received your questions from our first post Introduction to Pricing for Profit and I'm writing Part II to offer clarification for the % to your COGS (Cost of Good Sold). 

Thanks to the fantastic Mobile Fotographer*, I have a visual for you! So here you go... 

There are a lot of factors that go into your cost of goods. Basically anything that is a COST to you (both time and money) needs to be considered. So let's say that you have determined that your COGS is $10. We are going to use happy round number for the sake of making this easy to follow. The numbers that I put into the pricing calculator are not real they just equal $10.00. 

As you can see the TOTAL COST IS $10.00. Now let's figure out what you should actually charge. 

To be on the high end of your market (20%) means that your total cost is only 20% of your products retail price. Anything 20% or less is a fantastic profit margin and you should be really excited because you will have the means and opportunities to make your business profitable! 

To be in the middle of the pricing market (30%) than your total cost is 30% of your products retail price. You're loosing a little of the profit margin but it's still a good place to be!

If you're cost is 40% of your COGS than you're on the lower end of your market and you may not have a substantial enough profit margin to give you the capital you need to sustain your business. 

BELOW 40%: One mistake that is often made my newer photographers is to slash their prices to get business. The fatal error in this is that newer photographer more than anyone else need profits in order to build capital. I know you can feel what I'm talking about. You need a sample album, you need further education (like my 'Building the Biz' workshop) and you need profits to help you get better equipment. In short, you need, you need, you need... But you never seem to make enough to do anything about it. This is why! 

I want you to know that I GET IT! It's scary, what if nobody ever calls you again? What if people don't believe you're worth that much? Even more terrifying... What if they're right? Raising prices is scary... It's like opening the door to a blind date with the football captain and your biggest fear is a pile of flaming poop waiting for you instead of a corsage. I KNOW IT'S SCARY. I've been there - scared to death - waiting (2 weeks) for the phone to ring again. BUT IT DID RING AGAIN and again... And again! Until you do something about your pricing you'll never have the capital to grow you or your business. I understand that it can feel like where you want to be and where you are have the distance of the Earth to the Stars... But I'm telling you. Getting your pricing structured for Profit is the rocket-ship that will propel you forward. Oh and in this little metaphor lets say that clients are the fuel. Cause if you got no fuel the rocket-ship won't help much. Wow! I am super clever tonight!!! Anyone else impressed with my cleverness? Before I got off on my 'hurray for me - cleverness' party I wanted to say that I do know that you need clients to pay your new pricing. Getting clients isn't the hard part. I'll prove it at the workshop... Having everything ready for when those clients come, now that's tricky! 

I hope this helps you put yourself and your business into a better perspective when you're creating your pricing list. If you feel like you need personal help in how to transition your pricing or just need the encouragement and mentoring to do it. I am available for Phone Consults and of course at the Building the Biz Seattle Workshop on Aug 20 and 21st. 

* You can access the awesome pricing calculator inside the Mobile Photographer Studio Management Program


  1. Total motivation and specifics enough to help propel me forward. THANK YOU, THANK YOU, THANK YOU! I'm in the boat of wanting to charge more, but trying to get everything in order before I do. And I feel like my wallet is on fire. It's scary, but then again, I think anything that's really worth something is.

  2. that helped...much clearer now! thanks!!

  3. Quick question: What is the difference between "Cost of Goods" and "Cost of box, tissue, etc." What should be included in "goods" vs the packaging?

  4. Goods is EVERYTHING, Packaging is a component to everything Think of the Total Cost as the COGS.

    BTW- It's sometimes referred to as COGS or COG it's the same thing... It's the Total Cost for you to get a products into your clients hands.

    I'm glad this is helping!

  5. Thanks Leah!! You posted this at the perfect time for me. :) I'm getting my price list together now.

  6. So I'm curious...I have my pricing set up a little differently than everyone else talks about it. I charge all my money for my time and don't make a profit off my prints. Now obviously this means I charge quite a bit more up front to make up for lost profit on print sales. I'm curious what people's thoughts are on this method of pricing. Thoughts?

  7. Stephanie- I guess you're okay if you really charge enough for your session fee. The problem comes in when you don't know what product a client is going to order. What if they order a cd vs an 8X10? The cd, though cheap to make, takes a lot more of your time. Or a print vs an album. An album may cost you $150 to make, but takes up an additional 4 hours of your time designing it. (Arbitrary numbers.) I think that's where marking up specific products covers your specific time involved. And take that with what it is. I'm no Leah or anything. :)