Even if you are a service-based business, you might have physical products that you make and deliver as a result of your service. For example, if you create a wedding invitation design, you can sell save-the-dates, invitations, RSVP cards, envelopes, stickers or wax seals, all that stuff. Or if you’re a photographer, you sell prints and albums of the photos you take.
My philosophy is I don't upcharge very much, if at all, on something I did not personally create. Now if I have a professional-level printer in my house, and I print the invitations and cut them myself, then yes, I would probably upcharge those products. Or at least charge for the time I spend printing and cutting, plus the materials. But if I'm making a design, and I send the design to a commercial printer, and they charge me $75 to print 100 cards, I am not going to turn around and charge the client $750.
There was and kind of still is a trend among portrait and wedding photographers especially to say, "Okay, I will charge you $10 for your photo session, but you don't get any of your files or any prints and you have to pay $100 per digital file.” That just doesn't feel great to me personally because:
- it’s a bait and switch;
- you’re not guaranteed a good payout unless the client buys a big package. That means pressure on you to sell the big packages, which can result in yucky behavior. Plus it’s often quite difficult to convince people to cough up money TWICE.
My suggestion is to price your service in a way that’s profitable, using your client hourly rate, and then just do the cost of goods with a very small markup for handling the products. The time spent designing the product should be in your service rate, which is based on your client rate you figured out earlier, and then maybe you add 5-10% to the product cost to cover your time ordering, shipping, and writing a nice card to include with the product.