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How to price a product so it earns a profit

A step-by-step method: add every cost, count fees against the price, then choose your margin.

Last reviewed 2026-11-11

Most under-priced products are not priced by guessing. They are priced by adding a mark-up to the purchase cost and stopping there. The fees, the returns and your own time never get counted.

The method

  • List every cost per unit: the item, packaging, inbound freight, labour.
  • List costs paid once per order separately, such as postage or setup.
  • List the fees that are a share of the price: marketplace commission, card fees, delivery app commission.
  • Choose the profit you want as a margin on the price.
  • Solve for the price.

The formula

Price equals the fixed costs divided by one minus the percentage fees minus your margin. If your fixed costs are 20, fees are 5% of the price and you want a 25% margin, the price is 20 divided by 0.70, which is 28.57.

A mark-up of 25% on a cost of 20 would give 25. After the 5% fee, that sale leaves 3.75 profit. Priced at 28.57, the same product leaves 7.14. That gap is the reason to price from the fees, not from the cost alone.

Try it on your own product

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