When setting up an inventory item you will notice that there are two pricing methods. The first is Fixed Pricing and the other is Gross Margin. 

Lets look at Fixed Pricing first. Fixed pricing is a pricing method in which the prices are fixed, meaning they do not change unless manually changed. This means that if the price is set at $19.99 and your cost increases the price will remain at $19.99 unless you adjust it (or use some of our utilities to adjust, see related articles).

Gross Margin pricing however is set at a percentage which you wish to make on your sales. So let's say your standard cost is $5 and want to make 50% margin, the selling price at retail will be $10. Because margin is percentage based, if your standard cost increases the price will increase as well. For example, if your standard cost goes up to $10, in order keep the same margins the retail price will be automatically adjusted to keep the 50% margin, meaning the new selling price would now be $20.

In the end the choice of which to use is up to you, either a fixed price which will not change unless you change it or gross margin which changes as soon as your standard cost changes.