How to Price a Product to Sell Online (Without Losing Money on Fees)

Most new online sellers price by looking at competitors and going a little lower. It feels safe, but it skips the question that decides whether the shop survives: after every fee and every cost, is there anything left? Here is a method that answers it before you list.

Step 1: List the cost of one sale, not one item

Write down everything a single order costs you:

• Product cost, including inbound shipping and import duty if any
• Packaging: box, mailer, tape, insert card
• Postage or courier charge you pay
• Fixed per-order fees, such as a payment gateway’s fixed charge
• Your typical return or damage rate, as a cost per order

Packaging and returns are the two most often forgotten. They are small per order and large per year.

Step 2: Add up the percentage fees

Marketplace commission and payment processing are charged on the selling price, not on your cost. A marketplace taking 15% plus a payment fee of 2–3% means 17–18% of every price disappears before you see it. These cannot be added to cost like the items in step 1; they have to be built into the price.

Step 3: Decide your margin and solve for the price

Price = (all per-order costs) ÷ (1 − fee % − target margin %)

Example: product ₹400, shipping ₹60, packaging ₹20, so ₹480 per order. Fees total 18% and you want a 25% margin. Price = 480 ÷ (1 − 0.18 − 0.25) = 480 ÷ 0.57 ≈ ₹842. Simply adding 25% to cost would give ₹600 and, after fees, you would barely break even.

Step 4: Leave room for advertising

If you plan to advertise, your margin has to pay for it. Work out your break-even ROAS: 1 ÷ margin. With a 25% margin, ads must bring in at least ₹4 of sales for every ₹1 spent just to break even. If your ads typically return 3×, either the margin or the ad strategy has to change. The ROAS Calculator does this check in seconds.

Step 5: Sanity-check against the market

Now compare your calculated price with what similar products actually sell for. Three outcomes:

• Your price is below the market: good news. You can match the market and keep a higher margin, or stay lower to win sales.
• Roughly equal: compete on photos, delivery speed, reviews and service rather than price.
• Well above: look for a cheaper supplier, lighter packaging, a better shipping rate (check dimensional weight with the Shipping Cost Calculator), or a different product.

A pricing checklist before you list

• Have I included packaging, payment fees and returns?
• Does the price still work after a typical discount or coupon?
• Is there enough margin to pay for ads at my real conversion rate?
• Will the price still work if shipping rates rise by 10%?
• Have I recorded the date I last checked marketplace fees?

Step 6: Use price endings and bundles deliberately

Prices ending in 9 or 99 are common for a reason, but only after the maths works. Bundles and “free shipping above ₹999” thresholds raise the order value, which spreads fixed costs such as postage and payment fees over more revenue. Track your numbers monthly with the E-commerce Profit Calculator and adjust when costs or fees change.

Frequently asked questions