Starting a business in F&B or retail is exciting, but one of the first challenges you’ll face is setting the right prices.

Too high and customers walk away.

Too low and you eat into your margins.

Price setting goes beyond just covering costs. It’s also about balancing value, competition, and customer expectations, all while leaving enough room for profit. Whether you’re crafting a café menu or stocking shelves in a retail store, the principles remain the same: your pricing must make sense for both your business and your customers.

The Basics of Price Setting for F&B and Retail

For an F&B business, prices are shaped around the menu.

A café owner in KL, for instance, doesn’t just price a latte by calculating the cost of beans and milk. They also factor in rent (say, RM8,000 for a small café in Bangsar), utilities, staff salaries, and even consumables like takeaway cups. Menu planning becomes critical—you can’t simply copy the café down the road without knowing your own costs. A latte priced at RM12 in one area may not make sense if your rent is double theirs.

In retail, the principle is similar but expressed differently.

A small boutique in Penang that sources dresses from Bangkok may spend RM80 on each piece, add RM15 for shipping and duties, and target a mark-up of 2.5x, pricing them at RM250. But product planning means thinking beyond mark-ups—if the dresses take months to sell, storage costs and lost cash flow eat into profits.

You could have the trendiest items on your racks, but if they’re priced without proper planning, they’ll either sit unsold or sell out too cheaply to sustain your business.

Key Factors That Influence Pricing Decisions

The first and most obvious factor is cost. A restaurant sourcing imported wagyu beef at RM120 per kg will have very different pricing considerations compared to a nasi lemak stall spending RM5 on ingredients per plate. For the wagyu burger, the menu price may need to be RM35–RM40 just to make it viable, whereas the nasi lemak can be priced at RM8 and still generate healthy margins.

In retail, costs extend to warehousing, supplier terms, and even seasonal risks—festive stock that doesn’t sell quickly may have to be heavily discounted after Raya or Christmas.

Competition is the next challenge. If you’re a new bubble tea brand opening in SS15 Subang Jaya, you’re competing against 10 other outlets within walking distance. Matching the RM12 price point of established brands might work, but undercutting at RM8 could make customers assume your drinks are lower quality.

Retailers face the same balancing act. A branded sports shoe may sell at RM450 at an international chain, but a lesser-known store charging RM500 for a similar product will struggle without the same brand equity.

Finally, value perception can make or break your pricing. A parent at a pet store may willingly pay RM150 for a 10kg bag of kibble because it’s easier to load straight into the car compared to buying online and waiting for delivery.

Similarly, diners in Mont Kiara may spend RM25 on a beautifully plated brunch, but hesitate over RM10 nasi lemak at a roadside stall if the experience doesn’t match the price tag. Customers aren’t just buying the item—they’re buying convenience, ambience, and trust.

Simple Pricing Strategies That Work

For new business owners, straightforward strategies help you stay grounded.

Cost-plus pricing is the most basic: add up all your costs and include a mark-up. A bakery in PJ selling croissants at RM6.50 may have calculated RM4 for butter and flour, RM1 for labour, and RM0.50 for utilities, before applying a 30% margin. This ensures costs are covered but doesn’t always capture what customers are willing to pay.

That’s where value-based pricing comes in. A café known for hand-poured single-origin coffee from Ethiopia can charge RM18 per cup because customers associate it with quality and exclusivity. In retail, a boutique that stocks only locally made, handwoven batik may set a higher price point because of craftsmanship and scarcity.

Bundling and upselling are also effective.

A burger joint might offer a set meal—burger, fries, and drink—for RM25 instead of RM30 if bought separately. Customers feel they’re getting better value while the restaurant increases average ticket size. In retail, pairing a handbag with a discounted wallet encourages a bigger basket spend.

Even small psychological tactics—RM9.90 instead of RM10—make customers feel they’re spending less, even when the difference is negligible.

How a POS System Simplifies Price Setting

Pricing isn’t a one-time task—it needs regular adjustments. A POS system provides the data to back your decisions, replacing guesswork with evidence.

Take an F&B example: a burger shop in PJ notices from its POS sales report that its RM15 chicken burger sells 40% more on weekdays, while the RM35 wagyu burger peaks only on weekends. With this insight, the owner can create weekday lunch promos around the chicken burger and position the wagyu as a weekend indulgence.

In retail, a sneaker shop might see through POS data that premium sneakers above RM400 sell better in Klang Valley, while sandals under RM120 dominate in Penang. Instead of overstocking the wrong items in the wrong places, the owner can plan inventory and pricing for each location.

POS systems also streamline promotions and loyalty programs. For instance, offering cashback or automated discounts is easier when the system applies it seamlessly at checkout. And with Malaysia’s new e-invoicing requirements, a POS system ensures every transaction is recorded accurately, so you stay compliant without extra paperwork.

By integrating data, automation, and compliance, a POS system like StoreHub turns pricing from a guessing game into a strategy. You don’t just set prices—you refine them continuously based on actual customer behaviour.

Final Thoughts

For new F&B and retail owners, price setting often feels like one of the hardest early challenges.

It's about balancing costs, competition, and how customers see value. Pricing will never be perfect at the start, but with the right mix of menu planning, product planning, and strategy, you can adjust as you grow. And with a POS system to provide real-time insights and automate compliance, you’re shaping a profitable path forward.