First calculate the cost of materials and labor. Determine the cost of overhead, including sales, marketing, administrative costs, rent, and the many other expenses of running your own business. An economist would also add opportunity cost- such as the salary you could be making working for someone else. When determining your profit margin, consider the price elasticity of the product. Will demand increase if the price is lower? If so, will it increase enough to make it worth lowering the price? This just scratches the surface of the economics behind pricing your products and services, but it's a good start.