Cost price is what one item truly costs your business to get ready to sell. Selling price is what the customer pays. The gap between them has to cover more than the item itself: it needs to contribute to the running costs of the business and leave a profit. If you only copy a competitor's price or add a percentage to the supplier's invoice, you can sell quickly and still be too thin.
For a product business, start with the full cost of one sellable unit, then choose a price you can defend in your market. Check the result as both a naira amount and a margin percentage. That turns price-setting from a guess into a decision you can review.
Cost price vs selling price: the simple difference
Cost price is the amount you spend to buy or make one item, plus the direct costs needed to put that item in a customer's hands. Selling price is the amount shown to the customer. The difference is the gross profit on that item before wider business overheads.
Gross profit per item = Selling price − Cost price
A positive gap is necessary, but it is not automatically your final business profit. Rent, staff, data, marketing, delivery losses and other overheads still have to be paid from the money your products leave behind.
What belongs in your cost price?
Use the real cost of getting one unit ready to sell. For a trader, that can be more than the supplier's quoted price. For someone who makes products, it can be more than the raw materials.
- Supplier or production cost
- A fair share of transport, clearing or delivery charges
- Packaging or labels used for that unit
- Direct labour where you can reliably assign it to the unit
- Handling, alteration or other direct preparation costs
Avoid guessing. If ₦12,000 delivery covers 20 identical items, the delivery allocation is ₦600 per item. Write that down with the purchase cost, so the next price review has a clear starting point.
