[Glossary](https://pecuvo.eu/en/glossary/) · Business and projects # Pricing **In short:** Pricing is how you set the price of a product or service so that it covers the full cost, leaves a profit and is competitive enough to sell. **Simply put:** A good price has four jobs: it covers all costs (indirect ones too), leaves a profit for growth and a reserve, sells, and tells the truth about quality. Its parts are cost price + profit + VAT (if you are registered) + discounts and commissions. A price is tested in small steps, not set once and for all. **Example:** Direct costs €0.80, share of indirect costs €0.40, desired profit €0.30 → price before VAT €1.50. With 20% VAT the customer pays €1.80, while your income stays €1.50. **Watch out:** "the cheaper, the more customers" holds only up to a point. Below cost you lose on every sale. VAT is not your profit — you collect it and pass it on. Across the EU, VAT follows common rules: the standard rate may not be lower than 15% (VAT Directive 2006/112/EC, Article 97); rates and registration thresholds are set nationally. > **Example: Bulgaria** — The standard VAT rate is 20% (VAT Act, Article 66). From 1 January 2026 registration is compulsory once annual turnover in the country exceeds €51,130 (Article 96(1)). > > **Check in your country** — The VAT rates, the registration threshold and whether you must register. Ask your tax authority. **Source:** Council Directive 2006/112/EC — https://eur-lex.europa.eu/eli/dir/2006/112/oj · NRA, "VAT registration" — https://nra.bg/wps/portal/nra/taxes/dds-v-balgariya/registratsiya-po-zdds (in Bulgarian) ## In depth in the modules - [Module 18](https://pecuvo.eu/en/modules/flow-3-the-small-business/) ## Related terms - [Cost price (full cost)](https://pecuvo.eu/en/glossary/cost-price/) - [Margin](https://pecuvo.eu/en/glossary/margin/) - [Break-even point](https://pecuvo.eu/en/glossary/break-even-point/) - [VAT (value added tax)](https://pecuvo.eu/en/glossary/vat/) - [VAT registration](https://pecuvo.eu/en/glossary/vat-registration/) - [Business plan](https://pecuvo.eu/en/glossary/business-plan/)