Most kid businesses start with two pricing models, and both are wrong.
The first is free for friends. ("They'll pay me when they see how good it is!") Spoiler: friends do not pay. They take the bracelet and disappear.
The second is I don't know, what do you think? (Said while looking nervously at the customer.) Customers, even kind ones, will say "$1" because they don't want to make your kid feel weird. Now your kid has spent $4 on supplies to make $1 of revenue.
Pricing is the part of business kids are worst at. It's also the part where parents can help most, without doing the work for them.
The "free for friends" trap
The instinct to give the first product away to friends is generous and human. It is also business poison. Here's why.
Your friend, who got the bracelet for free, doesn't tell other people "I bought this amazing bracelet from her!" They tell other people "I got this bracelet, isn't it cute." The free transaction is not a marketing event. It's a gift.
Worse: when your kid eventually tries to charge that same friend, the friend feels weird. "But you gave Sara one for free?" Now there's a relationship problem on top of a business problem.
The rule: from the first sale, charge something. Even one dollar. The dollar isn't about the money — it's about your kid practicing the muscle of asking, and the customer practicing the muscle of paying.
The Revenue-minus-Costs minimum
Here's the simplest pricing rule a 9-year-old can remember:
Revenue minus Costs equals Profit. If your costs are $4 and you charge $4, your profit is zero. You're working for free. If you charge $3, you're paying customers to take your stuff.
So the absolute minimum price is whatever covers costs. Below that, your kid is losing money no matter how many they sell.
Most kid businesses should aim for at least double their costs. If supplies cost $4 per bracelet, charge $8. That's not greedy — it's just enough to actually be a business.
Time is a cost (and the hourly rate kids ignore)
This is the part that catches even adults: time is a cost.
If your kid spends 30 minutes making a bracelet, and they charge $4, they're earning $8 an hour for skilled custom work. That's barely above teenage babysitting rates, for harder work, with no guaranteed sales.
Help your kid calculate their hourly rate at least once. Take their typical sale, divide by the time it took to make and sell, and ask: "Does that feel fair?" Most kids look at the number and immediately want to either work faster or charge more. Both are correct entrepreneurial responses.
Real example: Zoe's wallpapers
In my Entrepreneurship Workbook, there's a real story about an 11-year-old named Zoe who started selling custom phone wallpapers for $2 each. She got more orders. She felt successful.
Then her mom asked her to calculate her hourly rate. Each wallpaper took 30 minutes. She was making $4 an hour.
Zoe did three things based on what the math told her:
- She raised her price to $5 per design.
- She created a pack: three designs for $12.
- She made a catalog of pre-designs that she could quickly customize, cutting her time in half.
Three months later she was making $9 an hour and earning over $100 a month. Same business, different pricing brain.
When to raise prices
Almost every kid business hits the same wall: you've got customers, you're working hard, and you're still not making much. The answer is almost always raise prices. (And it's almost always scarier than the math says it should be.)
A useful rule: when your kid has more customers than they can keep up with, that's the universe telling them they're priced too low. Raise prices by 25% and see what happens. Some customers will stop buying. The ones who stay are the ones who actually valued the product.
This is one of the most useful lessons your kid will learn. The business that survives isn't the one with the lowest prices. It's the one that knows what it's worth.