Quick Takeaway
To price a product for selling online, add up every cost per sale: product, packaging, shipping, marketplace and payment fees, advertising and tax. Then choose a price that leaves your target profit margin. Your break-even price is where profit is zero; never sell below it.
Key takeaways
- Price from your total cost per sale, not just what the product cost you.
- Marketplace, payment and ad fees are percentages of the price, so they grow as the price grows.
- Margin is profit ÷ price; markup is profit ÷ cost. They are not the same number.
- Know your break-even price before running discounts or ads.
- Use the fees from your own seller account: they vary by category, country and plan.
Many online sellers are busy but not profitable, because the price was set from the product cost alone. Fees, shipping and ads then take the margin away one sale at a time.
This guide gives you a simple pricing method and a worked example. You can run your own numbers in the profit calculator inside our free marketplace listing generator: it shows profit, margin and break-even price with exact maths.
- Break-even price
- The break-even price is the lowest selling price at which a sale covers every cost, including percentage fees, so profit is exactly zero.
Every Cost to Include
| Cost | Fixed or percentage? | Example |
|---|---|---|
| Product cost | Fixed | Buying or making one unit |
| Packaging | Fixed | Box, mailer, tissue, labels |
| Shipping you pay | Fixed | Postage or courier label |
| Marketplace fee | Usually a percentage, sometimes plus a fixed fee | Final value or transaction fee |
| Payment processing fee | Percentage plus fixed | Card processing |
| Advertising | Percentage or fixed | Promoted listings, ads |
| Tax or VAT | Percentage | Where you must charge or pay it |
| Returns and damage | Average per sale | A share of refunds and losses |
Fees vary
Marketplace fees depend on category, country, seller plan, advertising and fulfilment, and they change. Always use the current fees from your own seller account.
A Worked Example
A seller lists a bag at $49.99 and charges $5.00 shipping. Using illustrative fees, not any marketplace’s official rate: a 13.25% marketplace fee plus $0.30, charged on price plus shipping, and 5% of the price spent on ads.
| Line | Amount |
|---|---|
| Revenue (price + shipping charged) | $54.99 |
| Product cost | −$12.40 |
| Shipping label | −$6.10 |
| Packaging | −$0.85 |
| Marketplace fee (13.25% of $54.99 + $0.30) | −$7.59 |
| Advertising (5% of $49.99) | −$2.50 |
| Profit | $25.55 |
| Profit margin (profit ÷ revenue) | 46.5% |
If the seller cut the price to $29.99 to win sales, fees would fall a little, but profit would drop to $9.20 a sale (a 26.3% margin). The break-even price is $18.74: below that, every sale loses money.
Margin vs Markup
| Aspect | Formula | Example (cost $20, price $50) |
|---|---|---|
| Markup | Profit ÷ cost | $30 ÷ $20 = 150% |
| Margin | Profit ÷ price | $30 ÷ $50 = 60% |
Confusing the two is a classic mistake: a “50% markup” is only a 33% margin. Decide which one your targets are in, and stick to it.
How to Set Your Price, Step by Step
Step 1: Add up your fixed costs per sale
Product, packaging, shipping you pay and any fixed fees.
Step 2: Add up your percentage costs
Marketplace fee %, payment fee %, ad % and tax if it’s included in your price.
Step 3: Choose a target margin
Many sellers aim high enough to cover returns, slow months and their own time. Decide yours.
Step 4: Calculate the price
Price ≈ fixed costs ÷ (1 − percentage costs − target margin). The calculator does this exactly.
Step 5: Compare with the market
Look at similar listings. If you’re much higher, show why (materials, handmade, warranty); if you’re lower, you may be leaving money behind.
Step 6: Check the break-even price
Before any sale or ad campaign, know the price you must not go below.
Four Pricing Strategies Compared
| Strategy | How it works | Works best for |
|---|---|---|
| Cost-plus | Total cost per sale plus a target margin | Starting out; commodity products |
| Competitive | Priced close to similar listings | Identical products with many sellers |
| Value-based | Priced on what the buyer gains or feels | Handmade, unique or premium items |
| Psychological | Endings like .99 or .95, and price anchoring | Consumer products; used alongside the others |
In practice most sellers combine them: cost-plus sets the floor (never below break-even), the market sets the range, and value explains why you can sit at the top of it. Revisit prices when fees, shipping rates or product costs change, not only when sales slow down. Planning a holiday sale? Our holiday checklist for online sellers covers honest “was” prices and shipping deadlines.
Pricing Mistakes That Lose Money
- Forgetting percentage fees on shipping: many marketplaces charge fees on the total, including shipping.
- Free shipping without raising the price: the label still costs you money.
- Ads without a limit: advertising spend can exceed the profit per sale.
- Discounts below break-even: the more you sell, the more you lose.
- Ignoring returns: a few returns a month can erase a thin margin.
- Not counting your time: especially for handmade products.
Next Steps
Run your numbers in the free profit calculator, then write listings that justify the price: see how to write product listings for eBay, Etsy and Amazon. Selling to businesses? Send a proper invoice with our free invoice generator. And if order admin eats your week, see how to calculate automation ROI.
How do I calculate the selling price of a product?
Add all fixed costs per sale, then divide by one minus your percentage costs and target margin. For example, $20 of fixed costs with 20% fees and a 30% target margin gives $20 ÷ 0.5 = $40.
What is a good profit margin for online selling?
It depends on the product and channel. Work out what covers your fees, returns, time and growth, rather than copying another seller’s number.
What is the difference between margin and markup?
Margin is profit divided by price; markup is profit divided by cost. A 50% markup equals a 33% margin.
Do marketplace fees apply to shipping?
On many marketplaces, yes: fees are charged on the total the buyer pays. Check your marketplace’s fee page.
Is there a free profit calculator for eBay, Etsy and Amazon?
Yes. The marketplace listing generator includes a free profit and break-even calculator where you enter your own fees.