How to Price Products or Services in Nepal Without Underselling Yourself

Cost-plus pricing starts from your own numbers, not the market's. You add up everything a sale actually costs, then add a margin you decide in advance. It sounds basic, but almost nobody does it properly because they only count the obvious cost: raw materials.

A full cost-plus calculation has four parts. Materials are the direct inputs: fabric, ingredients, components, packaging. Time is your own labor at a real hourly rate, not zero, because your time is the one resource you cannot get back. Overhead is everything that keeps the business running whether or not you sell that day: rent, electricity, data, a slice of your platform fees, transport to buy supplies. Margin is the profit you decide to keep, a deliberate number, not whatever is left over after you feel embarrassed about the total.

The mistake almost every new owner makes is stopping after materials. They price a hand-knitted sweater at the cost of the wool plus a bit extra, forget the six hours it took to knit, forget the electricity for the machine, forget the packaging, and end up paying themselves less than a day laborer's wage while calling it a profitable business.

The other approach starts from outside your business: what are similar products or services selling for, and what will customers actually pay. This matters because cost-plus alone can price you too high for the market, or, more often in Nepal's crowded small-business scene, dangerously low if your own costs happen to be low and you stop there.

Market pricing means checking, not guessing. Look at three or four comparable sellers on Daraz, in nearby shops, or on Instagram. Note whether they include delivery and whether their quality looks similar to yours. A seller with unsustainably low prices might be about to close, might be a hobbyist who does not need the income, or might be losing money without realising it too. Their price is not automatically the right price for you.

The strongest pricing decisions use both methods together: calculate your true cost-plus floor first, then look at the market to see where you can realistically sit above it. If the market price sits below your floor, that is a signal to change your costs, your positioning, or your product, not to sell at a loss and hope volume saves you.

Nepal has a specific set of costs that eat into margins gradually because they are easy to overlook while you are focused on making the product. If you are VAT-registered, 13% VAT applies on top of your price on taxable sales, and if you forget to build that in, you either eat it out of your margin or get an awkward surprise at filing time. Not every small seller is VAT-registered, but if you are, or expect to cross the threshold, price with it in mind from day one.

Platform commissions are the other big one. Daraz takes a seller commission that varies by category, often somewhere in the 4-12% range, plus payment processing charges. eSewa and Khalti charge merchant fees per transaction, typically a small percentage. None of these fees are large individually, but stacked together they can eat up 15-20% of revenue on a marketplace sale, and a price built only around your workshop table costs will not survive contact with them.

Then there is packaging and delivery. A box, tissue paper, a printed card, and tape add up per unit even when each item feels cheap alone. Courier costs money whether you pass it to the customer or absorb it, and absorbing it without accounting for it is a silent margin killer.

This pattern ends more small Nepali businesses than bad products or bad marketing do. A new owner, afraid of losing customers, sets a low, friendly price to build a following. Sales come in, which feels like validation. But the margin is so thin that covering rent, restocking, and basic living costs is impossible, even at healthy volume. A year or two later they are exhausted, and the business folds, not because nobody wanted to buy, but because every sale barely paid for itself.

The fear is real: Nepal's small-business market is crowded and price-sensitive, and it feels like the cheapest option wins. But a business that cannot sustain itself does not serve customers for long, it disappears, and everyone counting on it absorbs the cost. Raising a price that started too low is also harder than pricing right the first time, because customers anchor to the first number they saw and feel cheated when it moves, even if the new number was the honest one all along.

The fix is not to charge whatever you like. It is to know your cost-plus floor cold, treat it as non-negotiable, and compete on service, quality, or story above that floor rather than by racing costs into the ground.

Say you make and sell hand-poured scented candles, sold individually through Instagram and occasionally on Daraz. Here is how a real cost-plus calculation looks for one candle.

Materials per unit: wax, fragrance oil, wick, and jar cost roughly NPR 180. Packaging, a printed label and small box, adds NPR 40. Time: each candle takes about 25 minutes, and valuing your labor at NPR 400 per hour gives roughly NPR 165. Overhead: workspace, melting-setup electricity, and data run about NPR 15,000 a month; at 150 candles sold monthly, that is NPR 100 per candle. Add those up: 180 plus 40 plus 165 plus 100 gives a true cost of NPR 485 per candle, before a single rupee of profit.

Now add margin. A 40% margin on NPR 485 gives a cost-plus floor of about NPR 680. Checking the market, comparable handmade candles on Daraz and Instagram in Kathmandu sell for NPR 700 to 950, so NPR 680 sits comfortably inside a sustainable range.

Sell it through Daraz and the platform's cut matters. A 10% commission plus a roughly 2% payment fee on a NPR 750 price removes about NPR 90, and absorbed delivery might be another NPR 80 to 120. That nets around NPR 545, still above your NPR 485 cost, but only about NPR 60, roughly 12%, once platform costs are honestly counted. Sell the same candle directly through Instagram with cash-on-delivery or an eSewa transfer, paying only a small merchant fee instead of a full marketplace commission, and you keep closer to NPR 250 to 260 of profit. The same candle at the same price earns very different amounts depending on the channel, and only a full cost-plus calculation shows you that.