Understanding Proper Costing in Nigerian Businesses || Profit Isn’t All About Selling Price

Running a business in Nigeria is not easy. The cost of goods is going up every day, exchange rates are unstable, and everyday expenses like rent, fuel, and salaries keep increasing. But one of the biggest mistakes many business owners make is not calculating the real cost of what they sell before setting their price.

A recent story that trended on Facebook started a serious conversation. A Nigerian woman in China, who sells human hair, posted a video showing how she bought hair for about $90 (around ₦144,000). But she was selling it for ₦500,000. People started calling her out, saying she was overcharging. Others supported her, saying she spent a lot on travel, hotel, shipping, and many other things. They reminded people that business is not just about buying and selling. There’s much more to it.

The Truth About Costing

Many Nigerians believe that once you buy something for ₦1,000 and sell it for ₦1,200, you’ve made a profit. But ask yourself: Are you really making profit at this time?

That ₦200 difference may not even cover the transport you used to get the goods. What about the rent you pay, the data subscription, the money you pay your staff, or even electricity and tax?

Of course, this can depend on the kind of business you run. A provision store, for example, may have smaller profits but quick turnover. You may sell hundreds of items daily and still stay afloat. But if you’re selling luxury items like human hair, shoes, or phones, the sales may not come every day, so you need to add up all your hidden expenses to survive.

You also have to consider competition. If everyone in the market is selling similar things at similar prices, you may feel forced to reduce your price just to attract customers. But this can be dangerous if you haven’t calculated your cost well. You may end up losing money without knowing.

Some Common Costs People Forget to Add

Flight tickets (if you’re buying abroad)

Hotel and feeding while sourcing products

Shipping fees, duties, and clearing agents

Shop rent and electricity bills

Staff salaries

Social media ads and business branding

Packaging materials and delivery

Tools or products to upgrade the goods (like treating or styling hair.

When you add all these, you’ll see that the selling price must be enough to cover your costs and still leave you with some real profit — not just turnover.

How to Properly Cost Your Goods or Services

If you’re running a business, here are simple steps you can follow:

1. Know your real cost price

Don’t just consider the price you paid for the item. Add all the costs that got it into your hand: delivery, customs, and more.

2. Add your running costs

Things like rent, electricity, salary, packaging, and even the data you use for WhatsApp or Instagram, they all matter.

3. Add value for your time and effort

Your skill, time, and stress are also part of your cost. If you spend hours looking for quality goods, your pricing should reflect that.

4. Factor in competition wisely

Don’t sell too low just because your neighbor is doing a promo. Understand your own business, customers and your numbers.

5. Add your profit margin

After covering everything, your final price should still leave you with profit to save, reinvest, or grow your business.

6. Keep proper records

Write down your income and expenses. It helps you know what’s working and where you’re losing money.

Ways to Improve Your Costing Skills

Use a costing sheet or app to track everything

Attend business trainings or workshops

Watch videos on YouTube about pricing and small business finances

Join online business groups or forums to learn from others

Speak to an accountant or mentor if you’re confused.

Pricing is not guesswork. If you want your business to grow and last, you must know your numbers. Don’t just copy other people’s prices. Your cost is not the same as theirs.

Whether you run a big shop or a small hustle from home, proper costing can be the difference between closing shop and building an empire. So next time you’re about to price that item, take a moment and ask: “Have I counted everything?”