How to set your prices: start from the cost that includes everything
Almost every pricing rule you will read multiplies the supplier price by two or three. The rule is not wrong so much as incomplete: the supplier price is roughly half of what an order actually costs you, and the half it leaves out is the half that varies.
Build the real cost first
Write these five lines for one unit of one product before you choose a price. Guess where you must, but write all five.
| Line | How to get it |
|---|---|
| Supplier cost | From the supplier, for the variant you will actually sell most |
| Shipping to your main market | Quoted, to a real address — not an average |
| Payment fees | The percentage plus the fixed amount per transaction |
| Refund allowance | Your expected refund rate applied to the whole order value |
| Currency conversion | If you are paid in one currency and pay suppliers in another |
Then choose a multiplier, and know what it buys
Multiply the full cost, not the supplier cost. What the multiplier has to cover is everything you do that is not the product:
- Your work. The photographs, the descriptions, answering messages. This is real and should be paid.
- Acquisition. If you ever want to buy traffic, the margin is what pays for it. A price with no room for advertising is a price that can only ever sell to people you already reach for free.
- The bad orders. Already in the allowance above, but worth naming twice.
- Being able to discount. A price with no headroom means you can never run a promotion, and promotions are how seasonal categories work.
The small-basket trap
The fixed part of a payment fee does not scale down. On a large order it disappears; on a very small one it can be several per cent by itself, stacked on top of the percentage fee. A catalogue of cheap items therefore needs a higher multiplier than a catalogue of mid-priced ones just to land in the same place.
Two practical answers, both better than shaving the margin: sell in bundles so the fixed fee is spread over more value, or set a minimum order value with shipping that reflects it. What does not work is pricing cheap items on the same multiplier as expensive ones and hoping volume fixes it. Volume multiplies the problem.
When the honest price looks too high
Sometimes the arithmetic produces a number that feels unsellable. That is information, not a reason to ignore the arithmetic. Three real options, in order of how often they work:
- Change the product. A lighter, smaller, or higher-value item in the same niche often prices comfortably where the first one did not.
- Change the source. A supplier with a warehouse near your buyers can cut the shipping line enough to change everything below it.
- Sell the reason. If your page explains what the item is, who it suits and what arrives when, it supports a price the same item cannot hold on a marketplace listing. This is the only one of the three that is really within your control today.
What is not on the list: pricing below your full cost to "get started". Those orders do not build a business, they fund somebody else's.
Questions
- What margin should I aim for?
- Ask instead: does the price cover the five lines above, pay you for your work, and leave room to advertise and discount? A percentage that satisfies those is right for you; a benchmark from somebody else's catalogue is not.
- Should prices differ by country?
- They can, and it is often sensible where purchasing power and shipping cost differ sharply. Be careful to keep it coherent — a buyer who finds two prices for the same item on the same brand loses trust quickly.
- Is it bad to raise prices later?
- Far less bad than staying at a price that does not work. Raise them on new products first, and on existing ones with the page rewritten at the same time, so the buyer sees more reason alongside the higher number.
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