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How to Price Your Products So You Actually Make Money

By Savora Finance · Reviewed 2026-11-08

A step-by-step pricing method with worked examples, covering costs, fees, margins and the break-even number.

The problem with guessing a price

Many new sellers look at competitors, pick something a little lower and hope. That fails when the competitor's costs differ from yours, or when you forget costs that only show up later: payment fees, packaging, shipping, refunds and advertising. A price should start from your costs and then be adjusted for the market, not the other way around.

Step 1: find your cost per unit

Add up everything it takes to deliver one item:

• Materials or the wholesale price
• Packaging, labels and inserts
• Postage you pay and do not charge for
• Payment fees: on Shopify with Shopify Payments on Basic, 2.9% of the order plus $0.30
• An allowance for returns, breakage and replacements, often a few percent

Step 2: choose the margin you need

Margin is the share of the price you keep as profit. Markup is the percentage added to cost. They are not the same. A 50% markup on a $10 cost gives a $15 price, but your margin is only 33%. If you want to keep 50% of the price, you must price at double the cost.

The formula that avoids mixing them up: price = cost ÷ (1 − target margin).

Step 3: a worked example

You sell a candle. Materials and packaging cost $8.00. A 5% allowance for returns and breakage adds $0.40, so your cost is $8.40 before payment fees. You want a 50% margin on the price, ignoring ads for now.

Because the card fee depends on the price, solve it in one step. The fee is 2.9% of the price plus $0.30, so costs are $8.70 plus 2.9% of the price. Price = $8.70 ÷ (1 − 0.50 − 0.029) = $8.70 ÷ 0.471, which is about $18.47. Round to $18.50 or, better, $19 so there is room for a small discount. At $19, the card fee is about $0.85, your costs are $9.25 and your profit is about $9.75, or roughly 51% of the price.

Step 4: add the cost of getting customers

The $9.75 is before advertising. If you pay $6 in ads for each sale, your real profit is $3.75 and your margin falls to about 20%. That is why the margin you aim for should include whatever you expect to spend on marketing. If your costs do not leave room, either raise the price, lower the cost or find cheaper ways to reach customers.

Step 5: work out the break-even point

Add up your monthly fixed costs: the Shopify plan, apps and anything else that renews. Divide by your profit per sale. If fixed costs are $60 and profit per sale is $9.75, you need about 7 sales a month to cover them. Our free calculator does this and shows how it changes at different prices.

Step 6: check the market

Now compare with similar products. If you are well above the market, you need a clear reason, such as better quality, a stronger brand or faster shipping, and your page must say it. If you are below the market and the margin is thin, you may be undervaluing your work. Raising prices a little often loses fewer sales than sellers fear, but test it with real customers rather than assuming.

Using Claude to check your numbers

An AI assistant can double-check arithmetic and spot missing cost lines. Give it your costs and ask: "Here are my costs per unit. List any costs I may have forgotten, and calculate the price I need for a 40% margin." Verify its calculations yourself or with the calculator, because assistants can make arithmetic mistakes.

Common pricing mistakes

• Forgetting to value your own time. If you are making the product, include a fair hourly rate.
• Free shipping without building shipping into the price.
• Discounting by a fixed percentage without checking whether the margin survives it. A 20% discount on a 40% margin leaves roughly 25% margin.
• Never revisiting prices when costs change.

Frequently asked questions

Keep reading

• Find a product to sell
• Etsy vs Shopify fees
• What Shopify costs
• Print on demand vs dropshipping

General information only, not financial advice.