Leo's handmade candles

Leo makes soy candles and sells them at weekend markets and online. Here's how he set his price.

Step 1: Cost per candle

Step 2: A share of fixed costs

Leo pays $175 a month in fixed costs: $30 for his website, $120 in market booth fees and $25 for insurance. He expects to sell 60 candles a month, so each candle needs to cover about $2.92 of fixed costs ($175 ÷ 60). His full cost is about $13.12 per candle.

Step 3: Choose the price

• Cost-plus: for a 40% margin, $13.12 ÷ 0.60 = $21.86.
• Competitors: similar candles sell for $18 to $28.
• Value: his candles are hand-poured locally with premium scents, and customers often buy them as gifts.

Leo sets his price at $22. It covers his costs, meets his target margin and sits comfortably within the market range.

Step 4: Check break-even and profit

• Contribution per candle: $22 − $10.20 = $11.80.
• Break-even: $175 ÷ $11.80 = 14.8, so he needs to sell 15 candles a month to cover his fixed costs.
• Profit at 60 candles: (60 × $11.80) − $175 = $533 a month, on top of the $24 an hour he pays himself.