How to price a product when shipping and fees eat your profit
You bought a product for 45 and want to make 30%. You add 30%, the price becomes 58.50, and after the first month you find shipping and fees have swallowed the profit. The percentage is not the problem. The method is.
Why adding a percentage to cost is not enough
Some costs are fixed per order, like the shipping you pay and packaging. Others are a percentage of the selling price itself, like payment gateway fees or a marketplace commission. That percentage grows as the price grows, so you cannot work it out before you know the price.
The fix is to start from the end: what has to be left over from the price? Then find the price that leaves exactly that.
The formula
Selling price = total fixed costs per order ÷ (1 − percentage fees − target margin).
Fixed costs here include the product cost, the shipping you pay and any fixed fee per transaction. Percentages are written as fractions, so 5% becomes 0.05.
Product cost 60, shipping 12 and a fixed fee of 3. Total: 75.
Percentage fees of 5% of the price, and a target margin of 20%.
75% of the price is left to cover costs, so the price = 75 ÷ 0.75 = 100.
At a price of 100: percentage fees are 5, total fees are 8, and profit is 100 − 75 − 5 = 20, exactly 20% of the price.
Back to the wrong 58.50
Take the product that costs 45. Add shipping of 15 and a fixed fee of 1, and costs reach 61. A price of 58.50 does not even cover them, so every order loses money before any commission is counted.
Fixed costs 61, percentage fees 2.5%, target margin 30%.
The correct price: 90.37.
Percentage fees at that price are 2.26, and profit is 27.11, which is 30% of the price.
When the target is impossible
If percentage fees plus your target margin reach 100% or more, no price can deliver it. For example, fees of 60% with a 45% margin add up to 105%. The Selling-price calculator refuses to calculate and explains why, instead of giving you a negative or absurd price.
What the calculation leaves out
- Tax is not added automatically. Work out the price first, then add VAT with the VAT calculator if it applies to you.
- No platform or payment fees are stored in the tool. Type the actual rates you pay.
- If you pay for shipping, work out the real shipping weight first with the Volumetric shipping-weight calculator, because carriers often charge by size and not just weight.
Once you have a price, you can check the margin and profit from the other direction with the Profit margin calculator.
Common questions
Can I price with a markup on cost instead of a margin?
Yes, there is a markup mode. For example, a 25% markup on a cost of 80 gives a price of 100.
What goes in fixed fees?
Any fixed amount you pay per order whatever the price, like a flat fee per payment or packaging cost.
Are my numbers saved?
No, the calculation runs in your browser.