Christy I see what you mean. I would guess that as you raise prices you would lose some customers, but that doesn't mean you're losing money. At $1.95 you make $0.95 per pretzel. Let's just round everything up to make the math easier. And let's say that at that price you sell 10 pretzels so you've made $10 profit on the product.

If you sold the pretzels for $3 instead of $2 maybe you only sell 5 pretzels, but you would still make the same $10 on the retail sales. Since your production time is cut down in having to make less though you might be able to spend that time marketing your product which might end up leading to more sales.

It's hard to say what a chocolate covered pretzel is worth to me without actually seeing one and eating it. It does sound pretty good though. I've been accustomed to thinking gourmet foods will cost more than non gourmet foods and I think most people would be willing to spend a little more too.

The only way to know is probably to test and see what happens. You could raise the price a little and see how many people are still buying and how much proift you're still making.

You mentioned having done research and purchasing similar products from other businesses. How much did they cost? Is it the same $1.95 you're charging? Are those pretzels as good as yours? If yours taste better I'd pay more.