How to price your products for profit (without guessing)
"Just double the cost" is the most common pricing advice in e-commerce, and it's also how thousands of sellers end up working for free. A 100% markup feels generous until marketplace fees, shipping, returns, and ad spend quietly claw it all back. Here's a method that prices for the profit you actually keep.
Start with your true unit cost
Your real cost is more than the product:
- Product / manufacturing cost
- Inbound shipping and duties
- Packaging
- Per-unit share of returns and breakage
Add these up before you do anything else. If a product costs $8 to buy, $1 to ship in, and $1 in packaging, your true unit cost is $10 — not $8.
Decide on a target margin, not a markup
This is where most pricing goes wrong. Margin is profit as a share of the selling price; markup is profit as a share of cost. A 50% markup is only a 33% margin — so "adding 50%" leaves you thinner than you think.
To hit a target margin, use:
Price = cost ÷ (1 − target margin)
For a 50% margin on a $10 cost: 10 ÷ (1 − 0.5) = $20. The Profit Margin Calculator does this both ways and shows the markup equivalent so you never confuse the two.
Subtract the fees you'll actually pay
Your target margin is gross — it doesn't survive contact with a marketplace. Before you commit to a price, run it through the relevant fee calculator:
If a $20 price leaves only a 20% net margin after fees and shipping, you either raise the price or cut cost — before you launch, not after.
Build in headroom for the things that go wrong
A durable price absorbs:
- Returns — even 5% of orders coming back changes the math.
- Ads — if you'll pay to acquire customers, that cost lives in the price.
- Discounts — if you run 20%-off promos, price so they're still profitable.
A useful rule: target a gross margin high enough that you can lose 10–15 points to fees and promotions and still profit.
Test against the market
Finally, sanity-check against competitors. If your profitable price is far above the market, the problem is usually cost, not pricing — renegotiate sourcing, increase order quantity, or change the product. Racing to match a price that loses money just loses money faster.
The bottom line
Price from your true unit cost, set a target margin (not markup), then subtract real fees and headroom for returns and ads before you commit. Use the Profit Margin Calculator to set the price and a fee calculator to confirm the net margin survives. Pricing isn't a guess — it's a formula you can run every time.