About this selling price calculator
Most sellers set a price from cost plus a rule of thumb, then find out later what fees and shipping left over. This calculator works the other way round. You decide the net profit margin an order should earn, and it solves for the price that delivers it, using the same cost and fee definitions as the E-commerce Profit Calculator. Use it when you are pricing a new product, repricing after a fee or shipping change, or checking whether a current price is high enough.
How to calculate a selling price
- Add up the costs that do not depend on the price: product, shipping you pay, packaging, fixed fees per order and any advertising cost per order.
- List the costs that are a percentage of what the customer pays: platform fee, payment fee and any advertising percentage.
- Choose a target net profit margin, as a percentage of customer payment.
- Work out what share of each payment is left for fixed costs: 100% minus the percentage costs minus the target margin.
- Divide the fixed costs by that share to get the customer payment you need, then take off the shipping you charge.
- Round up to the next cent, then check the result by calculating the profit forwards.
Selling price formula
Customer payment = fixed costs ÷ (1 − platform % − payment % − ad % − target margin %)
Item price after discount = customer payment − shipping charged
This form applies when both percentage fees are charged on the total customer payment, which is the calculator default. If a fee applies to the item price only, its percentage is applied to the item price instead, and the calculator solves that version. A discount is then added back: a percentage discount divides the item price by (1 − discount %), and a fixed discount is added to it.
Fixed costs here mean product cost, shipping cost, packaging, fixed platform and payment fees and advertising per order. If the percentages and the target margin add up to 100% or more, no price can work, and the calculator says so instead of showing a number.
Worked example
A seller wants a 30% net profit margin. The product costs $14.00, shipping costs $6.50 and packaging $0.80. The customer pays $5.00 for shipping. The example fees are 8% + $0.30 for the platform and 3% + $0.30 for payments, both on the total customer payment, plus $3.00 of advertising per order. These rates are illustrative only.
- Fixed costs: $24.90 (14 + 6.50 + 0.80 + 0.30 + 0.30 + 3.00)
- Share left for fixed costs: 100% − 8% − 3% − 30% = 59%
- Customer payment needed: $24.90 ÷ 0.59 ≈ $42.20
- Item price: that minus the $5.00 shipping charged ≈ $37.20
- Recommended price, rounded up: $37.21
| Customer payment (price + shipping charged) | $42.21 |
|---|---|
| Product, shipping and packaging | − $21.30 |
| Platform fee | − $3.68 |
| Payment fee | − $1.57 |
| Advertising | − $3.00 |
| Net profit per order | $12.67 |
| Net profit margin | 30.01% |
Rounding up to the next cent lifts the margin slightly above 30%, which is why the check shows 30.01%. With a 10% discount on the same order, the list price becomes $41.34, because the discount comes off before the margin is measured.
Target margin vs markup
Margin is measured against the price the customer pays. Markup is measured against your cost. They describe the same profit with different denominators, so a margin of 30% is a markup of about 42.9%. Putting a 30% markup on cost gives a margin of only about 23%.
This calculator uses margin because fees, advertising and discounts all scale with the price. A target margin already accounts for them; a markup on product cost does not. To convert between the two, or to price from cost alone, use the Markup Calculator.
How fees, ads and shipping change the price
- Percentage fees take a slice of every sale, so they shrink the share left for costs and push the price up faster than their size suggests.
- Fee base. If the platform fee applies to the item price only instead of the total customer payment, the example price becomes $36.53 instead of $37.21. Check which base your platform uses.
- Advertising. The $3.00 per order in the example adds to the price. With no advertising the price would be $32.12. An advertising percentage works like a fee.
- Shipping charged to the customer counts as revenue, so it lowers the item price you need, but the customer payment is what the margin is measured on.
- A higher target. Raising the target from 30% to 40% in the example moves the price from $37.21 to $45.82.
Common pricing mistakes
- Using markup when you mean margin, which leaves the real margin lower than planned.
- Leaving out the fixed fee per order, which matters most on low-priced items.
- Ignoring the fee base, so fees are calculated on the wrong amount.
- Forgetting that a promotion comes off the price before fees and before margin is measured.
- Pricing against product cost alone and leaving shipping, packaging and advertising to chance.
- Treating the recommended price as a market price. It is the lowest price that meets your target; whether customers will pay it is a separate question.
What the calculator includes and excludes
Included
- Product cost, shipping you pay and packaging
- Platform and payment fees, as a percentage and a fixed amount
- Advertising per order and as a percentage of revenue
- Percentage or fixed discounts
- Shipping charged to the customer
- Up to five additional per-order costs
Excluded
- Sales tax, VAT and GST
- Income or corporation tax
- Currency conversion and international card fees
- Refunds, returns and chargebacks, unless added as a cost
- Fixed overheads such as software, rent and salaries
- Demand: how many orders you will get at a price
The default fee rates are examples, not the fees of any marketplace or payment provider. Platform terms change, so check your own.
Frequently asked questions
What does the recommended price mean?
It is the lowest list price, rounded up to the next 0.01, at which an order earns your target net profit margin after every cost and fee you entered. Any higher price earns at least that margin. It is a calculation, not a prediction of what customers will pay.
Is a 30% margin the same as a 30% markup?
No. A 30% margin means profit is 30% of the customer payment. A 30% markup means profit is 30% of cost. A 30% margin needs a markup of about 42.9% on the same costs, so adding 30% on top of cost leaves you short of a 30% margin.
Why does the price go up so much when I raise the target margin?
Fees and advertising are percentages of what the customer pays, so each extra point of margin has to be earned on a price that is also paying those percentages. The calculator divides your fixed costs by what is left after the percentage fees and your target, so the price rises faster than the margin does.
What happens if my discount is applied?
The recommended price is the list price before discount. The calculator finds the discounted price that meets your target, then raises it so that, after your discount, the order still earns that margin. A 10% discount needs a list price about 11% higher than the discounted price.
Why do I sometimes get no recommended price?
If your percentage fees, advertising percentage and target margin together reach 100% or more of what the customer pays, there is nothing left to cover your costs at any price. Lower the target margin or the percentage fees. A 100% discount has the same effect, because the item brings in no revenue.
Are taxes, currency conversion or returns included?
No. All amounts are before sales tax, VAT and GST, and no income tax or exchange rates are applied. Choosing a currency only changes the symbol. Add returns or other per-order costs as additional costs if you want them reflected.
Are the default fees real marketplace fees?
No. The default fee rates are examples so the calculator works straight away. Replace them with the fees in your own platform and payment provider terms, and choose whether each percentage applies to the item price only or to the total the customer pays.