Act 3. First Sale

The Price

The margin math nobody teaches you.

Pricing is not a spreadsheet problem. It is a nerve problem. The maths is the easy part. The hard part is charging the number the maths gives you without discounting the moment a friend raises an eyebrow.

The ladder on this page has five rungs. True cost, cost plus a tax reserve, wholesale, recommended retail, and observed market. Your job is to land on or above the RRP rung. Every rung below it is a rung where you are paying the customer to take the candle away.

Why times four

Wholesale is roughly cost times two. Retail is roughly cost times four. That is not greed, it is the standard the trade runs on and it is what a wholesaler will price against when they set their own margin. If your retail is only cost times two point five, no shop will stock you, because they cannot mark it up to their own retail and still compete with your website.

For a 200 g soy candle at $14.05 true cost, that lands you at $56.22 retail and $28.11 wholesale. Feel free to move the RRP up. Do not move it down.

Figure · pricing-ladder

The shelf-price ladder. Five rungs of shelf price, not profit. True cost, cost plus tax reserve, wholesale at two times, RRP at four times, and observed market. Shows where most makers set the shelf too low.

Break-even, honestly

The break-even chart on this spread plots your fixed costs (rent, insurance, label admin and compliance time) against units sold at three different prices. At the RRP number you break even inside a plausible weekend market. At the friends-and-family number you never do. The chart is not there to guilt you, it is there to make the trade-off legible.

Figure · break-even

Break-even at each price. Units sold against profit, with three converted retail price points and their break-even units marked.

The friends-and-family trap

The stacked-bar diagram shows what a 30 percent friends-and-family discount actually costs you over a year. On thirty candles a month at $56.22 RRP, that discount is around $6,071.25 of margin gone before you have paid yourself. The chart is deliberately blunt. That is a second-hand car, gone every year.

Figure · friends-family-trap

The friends-and-family trap. A thirty percent favour priced from the live worked example, shown line by line so the margin loss matches the pricing ladder.

The fix is not refusing to gift candles. Gift them at full retail with a handwritten note. That is generous. Discounting to a permanent mate rate is not generosity, it is a slow leak.

The price on the shelf is the price. Discounts are for clearance and for people who never ask.

4×

Trade-standard retail multiple over true COGS·

£1,080

Annual margin lost to a permanent 30% mates rate (30 units/mo)·

The five-rung pricing ladder

True cost booked with overhead and labour before pricing starts
Tax reserve added on top of true cost, not carved out of margin
Wholesale = cost × 2 (leaves the shop their own mark-up)
RRP = cost × 4 (protects the shop's retail against your website)
Observed market price recorded quarterly, not annually

Symptom	Likely cause	Fix	Prevent
Customers keep asking for a discount at markets.	The shelf price reads like an opening bid, not a fixed price.	Print the RRP on the pitch card, refuse discounts, gift full-retail units to family with a handwritten note instead.	Set one written price policy per SKU and keep the pitch card visible; never verbalise a price without pointing at the card.
Wholesale enquiries stall after the price sheet lands.	Wholesale is above cost × 2, so the shop cannot double it and stay competitive with your DTC.	Rebuild wholesale at exactly cost × 2 and lift RRP if that leaves the DTC channel underpriced.	Model wholesale and RRP together in the pricing tool before publishing either; retest the ratio whenever COGS moves by more than 5%.